Drivers may face losing £30 billion in compensation as the Chancellor intervenes in a major court case against banks over car loans
London: The Chancellor is stepping in to influence a Supreme Court case. This case could lead to a massive £30 billion payout for drivers against major banks.
The court will hear claims against Lloyds, Santander, Barclays, and Close Brothers. The allegation? They took commissions without fully informing borrowers.
If the court rules in favor of drivers, it could mean huge payouts. But Rachel Reeves is pushing for the banks, which puts her at odds with many UK motorists.
This week, the Treasury argued that a ruling against the banks could hurt the UK’s business reputation. They believe it might slow down economic growth.
Ms. Reeves argues that forcing banks to pay could hurt their operations and raise car loan costs. She’s worried about the broader impact on the economy.
There’s also concern that a big payout could make the UK look like it has uncertain regulations. The Chancellor questioned the £30 billion figure, suggesting it might be too high.
The Supreme Court’s decision will follow a previous ruling that favored motorists. That ruling said customers should have been informed about commissions on their loans.
The Financial Conduct Authority is also getting involved, fearing this case could lead to payouts similar to the £50 billion from the PPI scandal.
Analyst Gary Greenwood noted that the government is keen to keep the compensation bill manageable. He mentioned that while they can overrule the court, it could lead to bad public relations.
He said the government is urging the court to use common sense in its decision. However, some legal experts are concerned about the government prioritizing banks over consumers.
Elizabeth Comley from Slater and Gordon emphasized that many people affected by this issue deserve justice. She warned that shielding lenders could damage public trust in the financial system.
