The Treasury is bidding to step into a major Supreme Court case that could drag Britain’s motor finance industry into a costly mis-selling crisis on a par with the infamous PPI scandal.
Ministers want the court to consider the broader impact on investor confidence in the UK’s regulatory regime and, crucially, to ensure that any compensation orders are kept “proportionate.”
It is up to the Supreme Court to decide whether the Treasury’s intervention will be allowed. However, the government’s push to influence the outcome underscores growing concern over potential liabilities that some analysts estimate could reach £44 billion — almost matching the £50 billion bill banks faced over PPI claims.
“We want to see a fair and proportionate judgment that ensures compensation to consumers that is proportionate to the losses they have suffered, and allows the motor finance sector to continue supporting millions of motorists,” a Treasury spokesperson said.
The news gave an immediate boost to banks heavily involved in motor finance. Close Brothers, a merchant bank with a sizeable car finance business, saw its shares rise by 20 per cent to 294p. Lloyds Banking Group, which owns Black Horse vehicle finance, gained 4 per cent to 61p.
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