Supreme Court rejects UK chancellor’s car finance intervention

MT HANNACH
4 Min Read
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Banks’ hopes to be protected from an erroneous sales scandal of several billion pounds suffered a blow on Monday after the judges prevented the British government from supporting industry in an imminent judicial case.

The treasure had taken the unusual measure to request permission to intervene in the next case of the Supreme Court, warning that an unfavorable decision could harm the banking sector and economic growth of blows.

The decision of the jury of five members, including the president of the Supreme Court, Lord Reed, to prevent the government from penetrating is a setback for banks Facing a remuneration bill coming up against tens of billions of pounds. The reasons were not taken for refusal.

The actions of Close Brothers, which are among the banks most exposed to car loans and last week, said that it should book 165 million pounds sterling on potential erroneous sales, dropped 7% on Monday.

The Supreme Court is due in April to hear an appeal launched by automotive loan suppliers contesting a decision last year of the court of appeal, who was moving with consumers who complained about the “secret” commissions on loans Automobiles.

The judgment according to which it was illegal for the banks to pay a commission to a car dealer without the enlightened consent of the customer sent shock waves via the banking system.

CEO of Lloyds Charlie Nunn said in December that the United Kingdom had to face an “investment problem” after the court decision.

Lloyds, who has the largest car financing lender in the United Kingdom, Black Horse, has reserved a provision of 450 million pounds sterling to cover potential reparation and legal costs. Bank shares fell 2.5% on Monday.

HSBC analysts estimated that the total cost of remuneration could reach 44 billion pounds sterling, not far from the 50 billion sterling pounds paid by banks for insurance against the protection of poorly sold payments.

Although it prevented the government from entering, the Supreme Court allowed the Financial Conduct Authority to intervene in the case.

The banking sector and the Treasury hope that the regulator will present to the Court of the same points that the government hoped to do.

The FCA said “Look[ed] impatient to help the court ”.

The Treasury said: “We are the Ministry of Economy of the United Kingdom so that he [seeking the intervention] It was the right thing to do for us. We respect the decision of the Supreme Court. »»

The Supreme Court authorizes official organizations to apply to the intervention in the cases it hears, but the authorization is only granted if the court thinks that the intervention will offer “significant aid” to the judges.

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