Barclays lost a bid to overturn a ruling on UK motor finance commissions on Tuesday, in a high court decision that weighed on bank shares as investors fretted about a potential multibillion pound consumer redress plan.
The case comes as the Financial Conduct Authority (FCA) considers an industry-wide compensation scheme which could become even more costly after London’s court of appeal ruled in October that it was unlawful for car dealers to receive commissions from banks without a customer’s informed consent. Bank of Ireland has a 2 per cent share of the UK motor finance market and analysts at RBC Capital Markets and Autonomous Research estimate the Irish lender faces between €950 million and €1 billion of total costs over the coming years stemming from the industry-wide investigation. That includes fines, redress and administration expenses. The high court in London on Tuesday dismissed a challenge by Barclays Partner Finance to a ruling by the Financial Ombudsman Service (FOS) that one of its customers was unfairly charged commission of just over £1,300 (€1,570) on a loan in 2018. Concerns raised about the risks to taxpayers from how housing bodies and the LDA fund construction deals The FCA, however, welcomed “additional clarity” the judgment brought to a wave of customer complaints about discretionary commission arrangements (DCAs), while the FOS said the ruling had endorsed its approach. “We are now carefully considering the judgment and what that means for other similar cases that are with our service,” said deputy chief ombudsman James Dipple-Johnston