“Following the Supreme Court’s important clarification regarding motor finance lending, we have chosen to withdraw our outstanding legal challenge in order to focus on engaging with the FCA’s consultation and any redress scheme it may subsequently implement,” the spokesperson said.
Barclays brought the appeal to the Court of Appeal after it lost the case against the FOS in December, when the U.K.’s High Court dismissed all three grounds of appeal brought by the lender.
The High Court found the ombudsman had interpreted Financial Conduct Authority rules, and the Consumer Credit Act 1974, correctly when deciding that the lender and car dealer involved in this case did not meet the relevant standards in place at the time, and awarded compensation to the motor finance borrower.
The bank had appealed, with the U.K.’s Court of Appeal set to hear the case on July 1. But the hearing was adjourned to wait for the outcome of the Supreme Court’s wider ruling on motor finance, and delayed until Sept. 16.
The Supreme Court sided with banks in two of three appeals relating to the commission paid by banks to motor finance brokers in its Aug. 1 ruling, but said a consumer in one case had been treated unfairly under the U.K.’s consumer credit act.
Analysts had previously estimated the bill for banks to be as high as £44 billion, if they were found guilty of illegally paying hidden commissions to brokers. Since the ruling the FCA has lowered the estimated cost to anywhere between £9 and £18 billion.
The regulator will consult in October on a redress scheme for individuals who were mis-sold motor finance.
