Lloyds Sets Aside £1.2bn for Black Horse’s Motor Finance Scandal – A Genuine Provision or Industry Misdirection?

Lloyds Banking Group has announced that it is setting aside a further £700m, taking its current provision close to £1.2 billion to cover potential liabilities arising from its motor finance division, Black Horse, in relation to the ongoing motor finance mis-selling scandal.

This revelation marks one of the largest provisions made to date in what is rapidly emerging as the next major financial mis-selling crisis.

A Significant Admission of Liability

The sheer scale of Lloyds’ provision must raise serious questions.

While the bank claims this is a responsible step to prepare for potential compensation payouts, it is also an implicit admission that significant wrongdoing has taken place within Black Horse’s motor finance operations.

The issue at the heart of the scandal is the failure of lenders and brokers to disclose commissions, leading to consumers being charged higher interest rates than they otherwise would have been.

The Industry’s Narrative – A Coordinated Effort?

Lloyds’ announcement coincides with a wider attempt by the finance industry to control the narrative ahead of the Supreme Court hearing in April.

The industry has been working tirelessly to push a misleading argument that mass compensation for affected consumers would destabilise the motor finance sector and harm the UK economy.

The FCA, government, and lenders are subtly shaping public perception, suggesting that if the Supreme Court upholds the Court of Appeal’s ruling, it would unfairly impose retrospective penalties on finance providers who were supposedly following the rules at the time.

However, this argument does not stand up to scrutiny.

The FCA’s own regulations, particularly CONC 4.5.3R, made it clear that commissions impacting the impartiality of the dealership should have been disclosed to consumers.

The existence of commission itself clearly impacted the impartiality of the dealership as it offered an incentive to propose certain finance agreements to its customers, over others, often resulting in customers paying more interest.

The reality is that the industry systematically ignored these rules, meaning finance providers are not victims of a retrospective rule change—they are simply being held accountable for breaches that were occurring all along.

A Strategy to Minimise Market Panic?

By announcing a £1.2bn provision now, Lloyds could be attempting to pre-emptively limit the damage to investor confidence.

Historically, in financial scandals such as PPI, banks initially set aside small amounts to downplay the true extent of their liabilities, only to increase provisions massively over time as claims poured in.

If history repeats itself, the £1.2bn may only be a fraction of what Lloyds will ultimately have to pay.

There is also a risk that this figure is being used to suggest that the scandal’s financial impact is both known and contained—when, in reality, the total cost to the industry could far exceed initial estimates.

Many analysts predict that if the Supreme Court rules in favour of consumers, the total compensation bill across all lenders could surpass the PPI scandal’s £38bn cost.

The Supreme Court Must Resist Industry and Government Pressure

With the Supreme Court set to make a crucial decision in April, it is imperative that justice is not obstructed by financial and political influence.

The government, under the misguided belief that mass compensation would harm the economy, may seek to interfere through regulatory bodies such as the FCA.

However, the truth is that a fair compensation process would put money back into the pockets of consumers, stimulating economic activity rather than hindering it.

The industry is attempting to muddy the waters, but the facts remain clear: finance providers systematically breached existing rules, profited massively at consumers’ expense, and now seek to avoid full accountability.

The Supreme Court must be allowed to rule based on the merits of the case, free from undue external influence.

A Watershed Moment for Financial Fairness

Lloyds’ £1.2bn provision is an important milestone in the unfolding motor finance scandal, but it should not be mistaken for the full story. If the Supreme Court upholds the Court of Appeal’s ruling, the financial implications for the industry could be far greater.

More importantly, it will represent a landmark victory for consumer rights in the face of corporate wrongdoing.

The coming months will be critical, and all eyes will be on the Supreme Court as it considers the biggest financial mis-selling case since PPI.

One thing is certain: the finance industry is bracing itself, and consumers must remain steadfast in their pursuit of justice.

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The Treasury’s Intervention in the Motor Finance Supreme Court Case Rejected – What Happens Next?

In a significant development in the ongoing motor finance mis-selling scandal, the Supreme Court has rejected an application by the Treasury to intervene in the upcoming hearing.

This decision marks a crucial moment in the fight for consumer justice, as it signals that the judiciary remains independent and unwilling to bow to government pressure designed to protect the financial industry at the expense of wronged consumers.

The Government’s Next Move – Pressuring the FCA?

With the Treasury’s intervention attempt rejected, it is now likely that the government will now seek to exert more pressure on the Financial Conduct Authority (FCA) to step in on its behalf.

The FCA, already under scrutiny for its handling of the motor finance scandal, may now find itself in the position of being used as a vehicle to carry out the government’s objectives—namely, shielding banks and finance providers from retrospective justice.

This move would not be without precedent.

Regulators have, in the past, faced political pressure to water down consumer protections in favour of financial stability.

However, the fundamental role of the FCA is to regulate financial markets in the interest of consumers, not to act as a shield for industry malpractice.

Any such attempt to use the FCA to introduce government intervention must be firmly resisted, as it would amount to an undermining of regulatory independence.

Banks Seeking to Muddy the Waters

At the same time, the banks involved in the scandal are employing their own tactics to complicate and delay the legal process.

In a recent manoeuvre, they attempted to extend the hearing and introduce an additional 75-page bundle of documentation at the last minute.

This transparent attempt to “muddy the waters” and delay proceedings is a classic legal tactic used by financial institutions looking to confuse matters and frustrate the path to justice.

Such actions highlight the extent to which the financial industry is willing to go to avoid being held accountable.

However, this application by the banks has also been rejected by the Supreme Court, demonstrating that it wishes to keep the focus firmly on the key issues at hand.

The Supreme Court Must Stand Firm Against Government and Industry Pressure

This case is about far more than just motor finance—it is about whether the UK legal system will allow government and industry to interfere with the fair application of justice.

The Supreme Court must resist any further attempts to influence the process, whether from politicians fearful of financial repercussions or from banks looking to escape liability.

One of the most concerning aspects of this attempted interference is the stance taken by Chancellor Rachel Reeves.

Her recent comments suggest a lack of understanding of how the finance industry operates, as she has expressed concerns that large-scale compensation for affected consumers could damage the economy and motor finance industry.

In reality, the exact opposite is true.

Mass compensation would see billions of pounds returned to consumers—ordinary people who are far more likely to spend that money than banks and finance firms.

This spending would provide a direct boost to the UK economy, particularly at a time when consumer confidence and disposable income levels are under strain.

The idea that holding banks accountable for their actions would somehow cause economic harm is fundamentally flawed, as was proven by the PPI scandal, and fails to recognise the real economic benefits of returning misappropriated funds to consumers.

What Happens Next?

With the Treasury’s intervention rejected, attention now turns to whether the government will indeed pressure the FCA to act on its behalf.

The Supreme Court must remain vigilant to ensure that justice is served without political or industry interference.

Consumers affected by the motor finance scandal deserve full and fair compensation, and the legal system must not allow itself to be manipulated by those seeking to avoid accountability.

The coming weeks and months will be pivotal in determining whether justice prevails or whether financial institutions, with government assistance, succeed in minimising their liabilities.

What is clear, however, is that any attempt to block consumer redress is not just legally and morally wrong—it is also economically misguided.

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The Upcoming Motor Commission Supreme Court Case: A Defining Moment for Consumer Justice

The Supreme Court is set to hear what could be one of the most significant financial justice cases in recent history.

At the heart of the case lies the question of whether motor finance providers should be held accountable for historical commission arrangements, and specifically the fact that the amount of commission was not disclosed to consumers who ultimately paid the commission via the interest charged on their finance agreements.

This case follows the Court of Appeal’s ruling, which correctly favoured greater consumer protection.

However, with the stakes now at their highest, it is widely expected that the Financial Conduct Authority (FCA), the government, and the finance industry will attempt to intervene to protect the interests of lenders and brokers.

A Push to Avoid Retrospective Accountability

The finance industry, supported by regulatory and governmental bodies, is likely to argue that motor finance providers adhered to the regulations as they were understood at the time.

The anticipated intervention will seek to ensure that, even if the Supreme Court upholds the Court of Appeal’s decision, lenders will not be required to retrospectively apply the law.

This would effectively shield them from facing action and compensation claims for years of misconduct.

The core argument will be that finance providers followed the rules in place at the time and that requiring them to compensate affected customers now would be unfair and overly punitive.

They will claim that imposing retrospective accountability would destabilise the industry, leading to financial instability and undermining confidence in financial regulation.

This is a well-worn tactic, often deployed when corporate interests face the prospect of significant financial liability.

The Reality: The Rules Were Already Being Broken

However, a much stronger counterargument exists—one that exposes the fallacy of the finance industry’s position.

The rules governing commission disclosure were not ambiguous as it has been suggested; they were clear and unequivocal.

Specifically, under CONC 4.5.3R of the FCA Handbook, dealerships were required to disclose commission arrangements if they had the potential to impact their impartiality.

Dealerships generally work with a panel of finance providers, all offering different commission (bribes) incentives to get the dealership to sign customers up to particular finance agreements.

This resulted in dealerships proposing finance agreements that were in the interest of the dealership (deals that earned the largest commission), rather than proposing the best deal for the consumer.

This practice fundamentally compromised the impartiality of dealerships and created a clear conflict of interest, meaning that the FCA’s regulations required full disclosure of these commissions at all times.

The fact that disclosure did not happen on a systemic scale indicates that the rules were routinely breached all along.

A Systemic Failure to Protect Consumers

The failure to disclose these commissions was not an oversight; it was an industry-wide approach that placed profit above consumer transparency and fairness.

The argument that finance providers merely ‘followed the rules at the time’ crumbles under scrutiny when considering that the applicable rules already mandated disclosure.

The reality is that consumers were deliberately kept in the dark about the financial incentives that could and did influence the cost of their finance agreements.

Had these commission arrangements been properly disclosed, or all of the available finance options provided to the consumer, this would have met the regulatory requirement.

Instead, consumers were misled into believing they were receiving impartial financial advice when, in reality, brokers were motivated by hidden financial incentives.

The Supreme Court’s Crucial Role in Delivering Justice

If the Supreme Court upholds the Court of Appeal’s decision, it must resist any attempt to shield finance providers from retrospective accountability.

To do so would be to reward years of non-compliance and to deny justice to the countless consumers who were misled by undisclosed commission structures.

It would also set a dangerous precedent, effectively signalling that regulatory breaches can be excused if they were widespread enough.

This case is not just about historical misconduct; it is about the integrity of financial regulation and consumer protection.

If finance providers are allowed to escape responsibility for breaking the rules, it will undermine confidence in the FCA’s regulatory framework and embolden future misconduct.

A Defining Moment for Financial Fairness

The upcoming Supreme Court case represents a pivotal moment in time for consumer justice.

The finance industry, with the backing of the FCA and government, will undoubtedly attempt to argue that retrospective accountability is unfair.

However, the truth is that these providers were already breaking the rules at the material time.

If justice is to be served, the Supreme Court must stand firm against these attempts to rewrite history.

Consumers who were misled by undisclosed commissions deserve redress, and finance providers must finally be held to account for their systemic failure to adhere to the regulations designed to protect the public.

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