The chancellor’s proposed intervention into the motor finance scandal has failed after the treasury’s bid to give evidence to the Supreme Court was rejected.
Car Dealer reported in January that Rachel Reeves had written to the court in an effort to protect the wider UK economy from the fall-out of the ongoing scandal.
In the submission, the Treasury argued that it should be allowed to provide evidence in Close Brothers’ upcoming appeal against last year’s landmark Court of Appeal ruling.
The chancellor argued that the decision had ‘the potential to cause considerable economic harm and could impact the availability and cost of motor finance for consumers’.
The application added that the case could ‘generate a perception that regulation in the UK is uncertain’ with the treasury asking that ‘any remedy should be proportionate to the loss actually suffered by the consumer and avoid conferring a windfall’.
The intervention was recently welcomed by the boss of Lloyds Banking Group but it does not appear to have impressed the Supreme Court.
Judges have now rejected the application, which means that the Treasury will not be allowed to give evidence to the crucial hearing.
The news has already had a major impact on lenders’ share prices, with values plummeting in the immediate aftermath of the decision.
Close Brothers and Lloyds experienced falls of 8.5% and 3.5% respectively yesterday (Monday) afternoon.
The result of the Supreme Court’s decision is that the FCA is now the only third party which will be able to make submissions in the case.
The watchdog has previously argued that should the appeal fail, it could have the potential to ‘destabilise’ the banking industry in the UK.
Ever since being set up at the UK’s highest court in 2009, official bodies, such as the Treasury and the FCA, have been allowed to apply to intervene in cases.
In response to the latest decision, a government spokesman said: ‘We respect the Court’s decision to not grant our application to intervene in the Hopcraft case and will monitor it closely.’
‘Consumers deserve accountability’
The news that the Treasury will not be allowed to intervene in the case has been celebrated by consumer groups, who have described it as ‘welcome news’.
Legal firm Slater & Gordon represents hundreds of customers, who they say are due ‘accountability and redress’.
Elizabeth Comley, head of group actions at the outfit, said: ‘It is welcome news to hear that The Supreme Court has decided that The Chancellor of the Exchequer will not be able to intervene in saving financial institutions who locked consumers into agreements that were neither transparent nor fair.
‘The consumers we represent deserve accountability and redress when they have been wronged and it is crucial that there remains a clear separation of powers in matters of this magnitude.
‘The recent Supreme Court decision that the government cannot be listed as an interested party in the mis-sold car finance hearing underscores the need for decisions to be made independently and transparently, without political influence.’