Barclays has been unsuccessful in its attempt to overturn a landmark decision by the Financial Ombudsman Service (FOS) regarding motor finance, a ruling that has significant implications for the industry.
The case, which began with a complaint from customer Jenna Lewis in December 2021, centered on the undisclosed commission of £1,600 paid to a credit broker during her car purchase, according to Car Dealer Magazine.
The FOS ruled in January 2024 that Barclays had acted unfairly, leading to a market-wide inquiry by the Financial Conduct Authority (FCA) into potentially unfair vehicle loan deals.
In response, Barclays launched a judicial review in April 2024, arguing that the ruling was based on misinterpretations of the law. However, Mr Justice Kerr dismissed the challenge on all grounds, leaving Barclays disappointed and considering an appeal. The decision has raised concerns about potential compensation payouts, with analysts predicting Barclays could face up to £250 million in claims.
The broader impact of this ruling is significant, as it follows a Court of Appeal decision in October 2024 that deemed it unlawful for lenders to pay commissions to vehicle sellers without fully informed consent from the buyer, according to This Is Money. This has led to a wave of concern across the motor finance sector, with other lenders also facing potential compensation claims.
This landmark ruling is a reminder of the need for transparency in consumer credit agreements. If you suspect you were affected, don’t delay—ensure your rights are protected today.
Barclays loses bid to overturn landmark Financial Ombudsman Service decision, but what are your thoughts on this development in the motor finance sector?
