The boss of Lloyds has welcomed the Chancellor’s intervention in the car loans mis-selling scandal despite a backlash over fears motorists will miss out on billions of pounds in compensation.
Rachel Reeves was slammed for ‘playing politics’ after the Treasury this week warned judges at the Supreme Court that PPI-style payouts to drivers risk harming the economy.
Campaigners claim her intervention puts compensation payments at risk, with Lloyds among those facing a bill.
Lloyds chief executive Charlie Nunn said he welcomed the Government ‘getting involved’.
In an interview with Bloomberg TV at the World Economic Forum in Davos, he said: ‘We are concerned both to make sure that the auto finance and motor finance industry can continue to support customers well, but also that we can remain an investable location where international investors can think regulation and the rule of law is predictable.’
Analysts at HSBC estimate banks and the finance arms of carmakers could face a bill of £44billion – close to the £50billion paid for the mis-selling of payment protection insurance (PPI).
The scandal has been dubbed ‘PPI on wheels’ and Lloyds has set aside £450million.
The Court of Appeal last year ruled it unlawful for car dealers to be paid hidden commission from lenders without receiving customers’ consent.
The Supreme Court is due to hear an appeal against the decision in April.
The Treasury this week called for ‘a fair and proportionate judgment’ that allows the industry to continue to make loans and does not undermine the UK as a place to do business.
Consumer Rights Solicitors managing director Kavon Hussain, who is fighting for compensation, said: ‘This is all about playing politics.
Reeves is showing total disregard to the separation of power between Parliament and the law courts.
‘If the case succeeds it will be detrimental for motorists as many might not get the compensation they are owed.’
Barrister Greg Lawton, a legal expert in the car loan industry, said: ‘This shows a level of concern for the industry that has not always been shown to consumers.
‘I understand Reeves wants to support the economy. But if you offered credit on the best terms, including being clear about any commission, this would also have a positive benefit for the economy.’
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