[ad_1]
By Sam Tobin
LONDON (Reuters) – Barclays on Tuesday asked London’s High Court to overturn a key ruling on motor finance commission in a case expected to affect a potential billion pound-plus consumer redress scheme from Britain’s finance watchdog.
The case comes after the Financial Conduct Authority said in January that it would examine the motor finance market over concerns about so-called discretionary commission arrangements on financing car purchases.
Barclays Partner Finance is challenging a decision by the Financial Ombudsman Service, which ruled earlier this year a customer was unfairly charged commission on a loan in 2018.
The ombudsman said the customer was charged a discretionary commission of 1,326.60 pounds ($1,734), representing 43% of the amount the customer was being charged for credit
Barclays has paid the customer compensation and will not seek to recover that money even if it wins its challenge, its lawyer Ben Jaffey said on Tuesday.
But Jaffey told the court: “The parties are not really here for a dispute about 1,300 pounds.”
He said the case’s outcome is “likely to be viewed as a template or model for other cases”, which will affect other complaints to the FOS and individual lenders, as well as the FCA’s planned redress scheme.
The FCA is an interested party in Barclays’ case, underlining its significance to its ongoing investigation.
The regulator’s lawyer Jemima Stratford said in court filings that the High Court’s ruling on Barclays’ case “will inform the FCA’s ongoing work in reviewing historical motor finance discretionary commission arrangements”.
The FCA said last month it was extending a pause to the deadline for motor finance companies to respond to complaints, and would set out the next steps in its review in May 2025.
It also said a redress scheme was “more likely” than when its work began.
Analysts have estimated the sector’s total compensation bill could reach 16 billion pounds, making it the costliest consumer banking scandal since payment protection insurance.
(Reporting by Sam Tobin; Editing by Jan Harvey)
[ad_2]
Source link