Car Finance Mis-selling Court Decision

Barclays has suffered a setback in the escalating car finance mis-selling controversy, losing a legal case that could lead to significant compensation claims against banks.

A judge rejected Barclays' appeal against a decision that found the bank had failed to treat a customer fairly during the purchase of a used car. The dispute centered on a broker-arranged loan for the vehicle.

The Financial Ombudsman Service had initially ruled against Barclays, stating the customer might have paid a higher interest rate due to an undisclosed commission agreement with the broker. Barclays had challenged this decision, but the court upheld the Ombudsman's ruling.

Judge Timothy Kerr emphasized in the verdict: "The customer's borrowing costs are increased by the broker's choice of an elevated interest rate. This remains true regardless of whether the lender and broker believe the customer benefits in other ways from the transaction."

Barclays shares dropped over 2% following the ruling, while other banks across the FTSE 100 and FTSE 250 also experienced declines.

A Barclays spokesperson commented: "As we have previously stated, this challenge involved a single, specific case where we disagreed with the Financial Ombudsman Service's decision. We are disappointed with the court's judgment and plan to appeal."

PM Law

National Solicitors