Rachel Reeves denies Labour hindering consumer interests in motor finance commission scandal
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Chancellor has been under pressure from lenders and lobby groups warning huge compensation bill could harm motor finance market. Chancellor Rachel Reeves has denied that the Labour government is working against consumer interests despite urging the supreme court to avoid handing a “windfall” to borrowers harmed in the motor finance commission scandal.
Reeves has been under pressure from lenders and lobby groups, who have warned that a massive compensation bill – expected to rival the payment protection insurance (PPI) mis-selling saga at £44bn – could disrupt the motor finance market. They warn it could force some lenders to shut up shop, offer fewer loans or hike interest rates to cover their costs.
The Treasury has since bid to intervene in the case – alongside lobby groups for motor lenders and car dealerships – and warned judges to “avoid conferring a windfall” if they rule in consumers’ favour. Challenged on whether the Treasury had caved into lobbying by the finance sector in deciding to wade into the case, the chancellor said, “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.
“I think we’ve got to get the balance right, and I think sometimes the balance has not been right in recent years. And I think having a vibrant car industry and motor finance industry in the UK is important,” she told reporters on the sidelines of the World Economic Forum in Davos, Switzerland.
