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Director Mohsin Patel comments on the motor finance case in City AM

Director Mohsin Patel comments on the government’s plans to intervene in the mammoth motor finance case, and discusses how it may set an uncomfortable precedent for future consumer cases.

Mohsin’s comments were published in City AM, 23 January 2025, and can be found here.

“Many will balk at the idea of Rachel Reeves essentially intervening in favour of big banks and lenders (some of whose shares surged over 20% on the news of the intervention).

“The Supreme Court’s role is principally to interpret and clarify law, particularly where there are ambiguities or disputes about its meaning. In the cases in question, the law has been well established for many years, as confirmed by the Court of Appeal.

“Whilst FCA rules provide the essential guidelines for authorised entity behaviour, the rules do not operate in a legal vacuum and all corporates should be aware of the various legal regulations that may apply to them set down by statute or common law. The FCA rules should not be used as a shield to protect against corporate misbehaviour, and to allow sophisticated lenders, that are well aware of their obligations, to do so sets a dangerous precedent for future cases.

“Recent research by Consumer Voice shows that under one-third of consumers agreed to their motor finance dealer receiving commission. This proves that at least some dealers were aware of and made the effort to comply with the law. Restricting the ability of consumers in any way to claim compensation would reward those that did not.”