LONDON (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, 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 and bigger rival Lloyds.
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)
