Rachel Reeves panic as £44bn court ruling shakes UK financial system | Personal Finance | Finance
In this afternoon, the UK’s highest court will decide to shake the financial system and make a 44 billion pound hole in the banking sector. The Supreme Court will decide that millions of car finance agreements have been sold incorrectly thanks to the shaded “secret commission” payments between lenders and dealers. Rachel will be hung on the decision.
Usually hidden from buyers, these backfires gave dealers an incentive to raise their interest rates to raise their own pockets or even. The case depends on whether these agreements have broken consumer protection laws. The Court of Appeal decided that they were doing it, but the lenders objected. Now it is up to the high court to have the last say. If he accepts, a compensation can follow the tsunami.
For the total industry, forecasts range from £ 30 billion to £ 44 billion and potentially competed with the £ 44 billion.
This is not just about engines. The decision may make any rental purchasing agreement from sofas and laptops to refrigerators and beds.
Banks are preparing for effect. High Street Bank Lloyds is already £ 1.2 billion, Close Brothers £ 165 million, Santander £ 295 million. These amounts may not be close enough.
Consumer Campaign Martin Lewis warned for a complete calculation for the credit industry and said that consumer loans can “shake the foundations”
A separate investigation of a separate financial behavior authority on the ban Optional Commission Agreements ban which was banned in 2021 will still come.
So where does Rachel Reeves enter?
It is said to deal with behind the scenes to avoid a second PPI -style scandal at the chancellery time.
Fallout warned that the UK financial services can make a torpedo and make car financing more difficult and expensive for families working.
In January, Davos raised the fear that the decision could reach the loan. In an extraordinary movement, he even tried to intervene in the court case, but the judges refused to hear the argument.
This is rare and serious questions raise the agenda. Should a chancellor lean on judges to cope with a correction plan?
Critics say it is excessive access. Or worse, a stitch to protect banks.
If it prevents payments, torn consumers will be accused of dealing with great financing. When up to 23 million people are potentially affected, this is a political nightmare waiting to be realized.
Lords Reed, Hodge, Lloyd-Jones, Briggs and Hamblen will publish their decisions at 4.35. Five minutes after the stock market is closed.
This is extremely extraordinary and judges that they know that it can ring investors. The Lloyds Banking Group, which is heavily exposed to the black horse engine arm, is on the fire line.
Reeves now caught a trap. He promises to bring back the trust in the UK’s institutions, but the attempt to invalidate courts is at risk of capturing confidence in his government.
A decision on hidden commissions can break down the UK consumer loan practices. Banks can bore the loan. Some may come out of the market. Borrowers may encounter higher costs. Desperately needed investment may fall.
PPI payments damage the banks, but the households provided an increase in cash. I’m not even talking about the economy, because they spend their winds. This time, the damage can outweigh from economic benefits.
Some warn that the chancellor can try to change the law to escape the spread, a nuclear option that will lead to turmoil.
However, consumer defenders say that millions of people have been misled and deserve justice. Bets could not be higher. The decision goes down for hours. Reeves Tenterhooks. Watch this area.
