Charlie Nan, CEO of Lloyds Banking Group, welcomed the government’s decision to interfere in the issue of poor sale of historical cars financing, and expressed his hope that this will help in achieving clarity in an industry that is subject to legal and regulatory pressure.
His comments following the Ministry of Treasury announced that it will request permission to raise its concerns in a pivotal hearing of the Supreme Court, which is scheduled to be held in April. The case stems from a ruling issued by the Court of Appeal in October, which, in the event of its support, may expose car financing providers to compensation for billions of pounds.
“We definitely welcome intervention. Nun told reporters during the World Economic Forum in Davos:“ We believe that the market needs clarity. ”He pointed out that up to 80 percent of new car buyers and a large segment of used car buyers depend on funding: It needs to make a well -working car financing and support consumers. “
The Court of Appeal Judgment expanded what was initially a limited investigation by the FCA. The result has sparked widespread concerns about the compensation bill similar to the reputable payment protection insurance scandal, which cost the banking industry about 50 billion pounds. Moody’s analysts estimated potential compensation at 30 billion pounds, while HSBC is estimated at 44 billion pounds.
Lloyds, the largest car financing provider in the United Kingdom, has allocated 450 million pounds to cover possible compensation. However, the city analysts suspect that this amount may rise if the Supreme Court supported the decision of the Court of Appeal. The threat to the escalation of obligations has greatly affected the price of Lloyds during the past year.
The participation of the Ministry of Treasury reflects the desire to prevent disturbance in the auto financing market and to ensure that any compensation imposed on lenders is “proportional”. Noun argues that the court’s ruling is “inconsistent with 30 years of organization,” stressing that it raises “broader questions about the ability of investment in the United Kingdom.”
He said: “We had a lot of our investors wondering how to cancel the regulatory system retroactively, by the Court of Appeal so easily,” warning that the continuous uncertainty could prevent future investment in the financial services sector in Britain.
The Financial Supervision Authority, which launched the preliminary investigation of the estimated commissions paid by the lenders of car dealers, was criticized for its widespread approach retrospectively. The estimated commissions were banned in early 2021, but the organizational body is investigating practices dating back to 2007. Some industry personalities are in particular criticizing the FCA for the fueling of the uncertainty in the market and prolonging the conflict.
As the Supreme Court is ready to consider the case in April, lenders and policy makers hope that a final ruling is issued between consumer interests and the stability of an important sector in the UK economy.
The post Lloyds CEO applauds Treasury move to tackle motor finance mis-selling first appeared on Investorempires.com.