LONDON (Reuters) -Barclays on Tuesday lost its bid to overturn a key ruling on motor finance commission, in a case likely to affect a potential multibillion pound consumer redress scheme from Britain’s finance watchdog.
The case comes as the Financial Conduct Authority (FCA) mulls a redress scheme and after London’s Court of Appeal ruled it was unlawful for car dealers to receive a commission from banks without obtaining the customer’s informed consent.
Barclays Partner Finance had challenged a decision by the Financial Ombudsman Service, which ruled one customer was unfairly charged commission of just over 1,300 pounds on a loan in 2018.
The High Court dismissed the appeal in a written ruling.
Barclays said it would seek to appeal.
“This challenge related to a single, specific case on which we disagreed with the Financial Ombudsman Service’s decision,” a Barclays spokesperson said: “We are disappointed in the court’s ruling and will be appealing.”
Barclays shares traded around 2.25% lower by 1035 GMT.
Lawyers for both Barclays and the FCA accepted at a hearing in October the case will have wider implications.
Barclays’ appeal in October was heard just weeks before the Court of Appeal’s landmark ruling in three linked cases involving Close Brothers and South African lender FirstRand, which sent shockwaves through the motor finance sector.
The United Kingdom’s Supreme Court last week granted permission to appeal, which will be heard in early 2025, in a sign of hope for lenders.
Other British lenders such as Lloyds and the UK arm of Spain’s Banco Santander have set aside 450 million pounds and 295 million pounds respectively to cover possible costs related to motor finance.
(Reporting by Sam Tobin; additional reporting by Kirstin Ridley; editing by William James)
