Barclays is back in court this week seeking to overturn a landmark Financial Ombudsman ruling concerning undisclosed commission payments in motor finance—a case that could open the floodgates to hundreds of millions of pounds in compensation claims.
The appeal comes after the bank lost a High Court challenge in December, when Mr Justice Kerr dismissed its application for judicial review and ruled against Barclays on all three grounds of its case. A costs order was also made against the bank at the time.
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 of nearly £1,600 to a credit broker.
The FOS upheld the complaint in 2021, stating that the commission was not clearly disclosed and therefore unfair under consumer credit rules. In response, Barclays sought a judicial review, fearing the ruling could set a precedent for widespread claims related to similar finance agreements made between 2010 and 2019.
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.
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