Slater & Gordon has criticised Chancellor Rachel Reeves’ intervention in the Supreme Court case on mis-sold car finance commissions, following lobbying from the banking and motor finance industries.
The Manchester-based law firm, which represents tens of thousands of claimants, argues that Reeves’ move to cap compensation payouts prioritises financial institutions over consumer justice.
Elizabeth Comley, Chief Operating Officer at Slater & Gordon, stated: “While we recognise the importance of maintaining confidence in British lenders, this cannot come at the expense of justice for the individuals affected.” She warned that limiting compensation could erode public trust in financial institutions and weaken consumer protection frameworks.
The Treasury’s intervention follows warnings from UK Finance, the Finance & Leasing Association (FLA) and major lenders — including Lloyds Banking Group, Santander, and Close Brothers — that a ruling in favour of consumers could result in up to £44 billion in liabilities, threatening credit availability. The Financial Times reported that the Treasury has urged the Supreme Court to ensure any compensation is “proportionate to the loss actually suffered by the consumer” and avoids a “windfall.”
News of Reeves’ intervention saw the share prices of some big banks, including Lloyds and Close Brothers, surge because the expected hit to profits will be much lower than previously thought.
At the World Economic Forum in Davos on 21 January, Reeves defended the Treasury’s stance, stating: “There is nothing pro-consumer about making it harder for people to buy an affordable car for their family. That would be bad for working families.” She also stressed the need for a “vibrant car industry and motor finance industry in the UK.”
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The FLA, which represents motor lenders and leasing firms, has echoed concerns that extensive compensation claims could lead to reduced loan approvals and higher interest rates. The National Franchised Dealers Association, representing car dealerships, has also applied to intervene in the case, arguing that excessive redress could disrupt dealer-lender relationships and reduce financing options for consumers.
Industry stakeholders remain concerned that the Supreme Court ruling could extend beyond motor finance, impacting other commission-based lending models, including insurance products. FCA Chief Executive Nikhil Rathi recently cautioned the House of Lords financial services regulation committee that the case presents a “potential issue” for wider financial markets.
With approximately 80% of new vehicles in the UK acquired through finance agreements, the sector facilitated £16.9 billion in loans last year. Lenders, dealerships, and regulatory bodies are closely monitoring the case, as its outcome is expected to shape future policies governing transparency, lending practices, and consumer redress.
Motor finance in the dock: Court ruling could reshape UK dealer commission models
UK Chancellor intervenes in car finance mis-selling case to protect lenders ‘Nearly 44% of interest charges funnelled into hidden commissions’
