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Barclays’ bid to overturn car finance ‘mis-selling’ ruling is wrong, watchdog says
Barclays
Britain’s financial complaints watchdog is fighting Barclays’ bid to overturn a key decision at the heart of the car finance “mis-selling” scandal.
The Financial Ombudsman Service, which decides on customer complaints, is trying to block Barclays’ application for a judicial review of its findings.
The dispute revolves around a January ruling by the ombudsman, who found that the bank’s auto lending division had commission paid unfairly to a credit broker.
The ruling revolved around the treatment of a single customer, known as Miss L, who was not informed that her loan agreement with Barclays involved £1,600 in commission.
The findings of the case caused an uproar in the industry, as the Financial Conduct Authority (FCA) launched a major review to see whether customers had been treated unfairly when taking out loans from used car dealers.
This prompted other lenders, such as Lloyds Bank and Close Brothers, suffering a financial blow.
However, Barclays tried to resist the ombudsman putting together a cool challenge.
This set the stage for a bitter dispute in the High Court, as the ombudsman accused the bank of arguing “academic points”.
In his court filing, he said: “The claimant (Barclays) had full opportunity to provide evidence that the car was not sold by the dealership for profit but failed to do so.”
If Barclays is successful in its application for judicial review, the decision could hamper the FCA’s investigation.
The regulator has paused any further complaints until September, while it gathers more information and awaits the outcome of the judicial review.
In its original court application filed in early April, Barclays said the court should overturn the ombudsman’s decision. It said it had “real divergence” between the agency’s position on complaints and that of the courts, where the ombudsman had lost a succession of cases.
A Barclays spokesperson said: “We do not agree with the Financial Ombudsman Service’s decision in this case and are therefore challenging it.
“This challenge relates to a single, specific case and, separately, we continue to support the Financial Conduct Authority’s review into historic vehicle finance arrangements.
“Due to the ongoing nature of this case, we cannot share anything further at this time.”
The Ombudsman and the FCA have been contacted for comment.