A separate Court of Appeal hearing between Barclays bank and the Financial Ombudsman Service on discretionary commission arrangements is slated for September, after a lower court ruled against Barclays late last year, leading to the bank appealing. That will also inform the FCA’s thinking.
4. Will Rachel Reeves stay away?
Before the ruling, reports were swirling that Chancellor Rachel Reeves, the U.K.’s top finance minister, would intervene to put in place a law circumventing the Supreme Court judgment if its ruling had ended up leaving banks on the hook for huge redress.
But that was when analysts thought the redress scheme would cost lenders £44 billion, and hurt the U.K. as a place to invest. So, is a max £18 billion bill palatable enough that Reeves will stay away?
On Monday, Prime Minister Keir Starmer’s official spokesperson said: “We respect the judgment from the Supreme Court, and we’ll work with regulators now and the industry to deliver the scheme that the FCA has set out.”
He added: “We want to make things right for consumers. We want to restore trust in the car finance market and make sure that lenders are playing fair. So we will obviously support the FCA in running this consultation.”
Reeves and the Treasury have remained notably quiet, beyond a generic statement Friday. As the chancellor has thrown her weight behind boosting the City of London to help Britain’s ailing economy, she may still be considering the impact on the financial services sector and whether any intervention is needed. The Treasury declined to comment.
5. Is the fight now over for the banks?
FLA’s Haddrill said Friday that the judgment was an “excellent outcome” for lenders. The stocks of Lloyds Banking Group, Barclays and Close Brothers — major car finance lenders — all jumped on Monday as investors breathed a sigh of relief.
But there’s still potential for the redress scheme to upset the sector, which could challenge the FCA at the U.K.’s Upper Tribunal — potentially sending the topic straight back to the courts to thrash out. So there could be more fireworks to come.