Lloyds CEO welcomes Reeves’ intervention in car finance case

(Bloomberg) — Lloyds Banking Group Plc’s boss said he welcomed the British government’s recent decision to intervene in a landmark court case over controversial car loans, saying the move could help To maintain the investability of the UK.

The Treasury, led by Finance Minister Rachel Reeves, said this week it had told the Supreme Court that a case over historical practices by car finance firms could cause considerable financial harm. Lloyds Bank chief executive Charlie Nunn said in an interview on Thursday that he welcomed the government’s “involvement in this case”.

“We want to both ensure that auto finance and the auto finance industry can continue to provide good support to customers, but also that we can continue to be an investable place where international investors see regulation and the rule of law as predictable, which is a very Important questions,” Nunn told Bloomberg Television’s Francine Lacqua in Davos, Switzerland, for the World Economic Forum.

Car loans are under scrutiny as consumers claim the way their loans are priced is unfair to them, while banks pocket the money through so-called discretionary commission arrangements with dealers, a practice banned in 2021. The Supreme Court is scheduled to hear an appeal by lenders against a lower court ruling last year that found it illegal for banks to pay commissions without customers’ informed consent.

Bank of America analysts recently estimated that the industry could face up to 38 billion pounds ($47 billion) in costs related to the incident. They found that Lloyds Bank, the largest car finance provider alone, could be liable for £3 billion. The bank has set aside 450 million pounds ($589 million) to cover possible compensation and other costs.

Speaking about the need to get the British economy back on its feet, Nunn said the industry looked forward to supply-side reforms focused on regulation.

“We need to see action now and an accelerated pace of impact for UK customers,” he said. “When regulators prioritize competitiveness and growth, there is an opportunity to enable people to take appropriate levels of risk and allow the economy to continue to grow.”

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