Particle.news
Download on the App Store
8 ARTICLES
·
last mo.

Reeves Weighs Retrospective Law to Cap £44bn Motor Finance Liability

Discussions with ministers have focused on a law that would override the Supreme Court’s imminent decision on motor finance payouts.

Millions of people have signed up with claims management companies in the hope of securing redress
Image
Image
Image

Overview

  • Chancellor Rachel Reeves is reportedly exploring primary legislation to limit or cap an estimated £44 billion compensation bill if the Supreme Court upholds the Court of Appeal’s ruling on undisclosed broker commissions.
  • Treasury officials have held talks with the Ministry of Justice and business departments about drafting a law that could retroactively supersede the forthcoming Supreme Court verdict.
  • The Supreme Court is set to hand down its judgment on August 1, potentially entitling millions of customers who took out car finance before January 2021 to redress.
  • Major lenders including Lloyds Banking Group, Santander UK, Barclays and Close Brothers have already set aside roughly £1.7 billion in provisions against possible compensation costs.
  • The Financial Conduct Authority and industry bodies warn that an unmitigated ruling could restrict motor finance lending, raise borrowing costs and deter investment in UK credit markets.