A Treasury committee member has branded Chancellor Rachel Reeves's attempt to intervene in the Supreme Court car finance scandal case as 'unprecedented and disgraceful', warning it sends a 'really bad message' to consumers. Bobby Dean, Liberal Democrat MP and member of the Treasury committee, said the government appeared willing to defend wrongdoing by banks over consumer rights.
The Supreme Court largely sided with finance companies on Friday, helping lenders avoid a potential £44bn compensation bill. However, Reeves had sought to intervene in January's hearing, urging judges not to award 'windfall' compensation to borrowers – an attempt that was ultimately rejected. The Guardian also revealed that the chancellor had considered overruling the court's decision with retrospective legislation to save lenders billions.
Dean criticised the move, saying: 'What message does it send to consumers that the industry can do wrong, the courts can support the claim, but the government is ready to intervene and defend the industry that's done wrong, instead of defending the consumer?' He added that the government seemed 'too keen to demonstrate it is on the side of business' and risked setting a 'bad precedent' for consumer redress cases.
The car loan industry had lobbied intensively ahead of the ruling, with the Finance and Leasing Association (FLA) warning that a large compensation bill could push some lenders into failure or restrict credit access. FLA head of motor finance Adrian Dally said the industry's interests aligned with consumers', arguing that car finance was 'vital' for millions to get to work and school.
The Financial Conduct Authority is due to confirm whether it will press ahead with a compensation scheme before Monday's market opening. A Treasury spokesperson said: 'It is vital that consumers have access to motor finance to enable them to spread the cost of...'
