UK car finance companies may face only minor costs from mis-selling scandal, specialist says
11/02/2025 12:54
LONDON, Feb 11 (Reuters) - Britain's motor finance
industry might be able to dodge what was expected to be one of
the country's costliest consumer banking scandals because of a
political focus on deregulation and growth, a specialist motor
and property lender said on Tuesday.
Ratings agency Moody's said last November that the total
industry costs for a British investigation into historic motor
finance sales and "hidden" commissions by some banks and
specialist lenders could reach 30 billion pounds ($37 billion).
But Anthony Coombs, the executive chairman of S&U SUS.L ,
said a government push for responsible risk-taking to help
ignite economic growth could be encouraging as the Supreme Court
prepares to hear a landmark mis-selling case in April.
"My view is that even should the Supreme Court uphold the
lower court's decision in principle, any 'harm' found to have
been suffered by consumers will be so marginal as to make
demands for redress minimal," he said in a trading statement.
Britain's Finance Minister Rachel Reeves is among those
seeking to intervene in the case amid concerns that a lower
court judgment could make it harder for consumers to get car
loans if it is allowed to stand.
Around 80% of new vehicles in Britain are bought on finance.
But the market was thrown into disarray after the Court of
Appeal ruled last year that it was unlawful for car dealers to
receive a commission from banks that provide car loans without a
customer's informed consent.
The ruling sent shares sliding in lenders such as Close
Brothers CBRO.L and bigger rival Lloyds LLOY.L .
Lloyds declined to comment and Close Brothers did not
respond to a request for comment.
($1 = 0.8084 pounds)
(Reporting by Kirstin Ridley; editing by David Evans)
((kirstin.ridley@thomsonreuters.com; +44 (0) 207 513 5666;))