Barclays is appealing a Financial Ombudsman ruling regarding undisclosed commission payments in a motor finance case, originally dismissed by a High Court judge. The dispute emerged from a customer's complaint about a loan agreement that included a substantial commission, which was deemed unfair due to lack of disclosure. The appeal could potentially result in compensation claims totaling up to £250 million, impacting Barclays and other lenders offering similar financing. A concurrent Supreme Court case could further influence the UK's consumer credit landscape, raising concerns among financial institutions.
At the heart of the dispute is a complaint made to the Financial Ombudsman Service (FOS) by a customer who purchased a second-hand Audi through Arnold Clark. The customer claimed they were not informed that their loan agreement with Clydesdale Financial Services, a subsidiary of Barclays, included a commission payment.
Barclays has now returned to court, appealing Mr Justice Kerr's decision. The appeal is being heard at the Court of Appeal over two days this week, with a judgment expected later in the year.
An analyst from RBC Capital Markets has estimated that the potential cost to Barclays could reach up to £250 million if the ruling leads to a wave of successful complaints and compensation payouts.
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