Chancellor moves to limit motor finance lenders’ liability

On Monday, the FT reported that Chancellor Rachel Reeves has stepped in to address the fallout from a legal case that could cost motor finance lenders millions. The Treasury is looking to intervene in the forthcoming Supreme Court case (Johnson/Wrench/Hopcraft v FirstRand/Close) following concerns about the Financial Ombudsman Service's handling of complaints linked to mis-sold car finance.

The move aims to protect lenders from hefty payouts that could make car loans more expensive and harder to access. Industry voices have already warned the issue threatens Britain’s reputation as a reliable place to invest, with some banks already reconsidering their role in the sector.

Lenders have scrambled to adjust processes since the initial ruling last year, with some halting lending temporarily. Reeves’ intervention reflects growing fears that unchecked liability could harm both the finance industry and consumers.

By acting now, the Chancellor is hoping to stabilise the market and prevent disruption to car finance availability in the UK which can only be a good thing for the industry whilst we await the Supreme Court decision.

We’ll be watching this move with interest over the coming period and will keep you posted of any further developments.

If you would like to discuss this in more detail or require support please contact:

Jo Davis - 07741 240114 / Jo.Davis@auxillias.com

Daksha Mistry - 07458 304068 / Daksha.Mistry@auxillias.com