The Chancellor, Rachel Reeves, is under fire for her “unprecedented and disgraceful” intervention in the car finance scandal, with a senior MP accusing her of siding with financial institutions over consumers. Bobby Dean, a Liberal Democrat MP and member of the Treasury committee, said Reeves’s actions, which included an unsuccessful attempt to lobby the Supreme Court, send a “really bad message” to the public. He argues that by defending the industry, the government is signaling that it is prepared to protect companies from the consequences of their wrongdoing.
Reeves’s controversial intervention involved urging Supreme Court judges to avoid a large-scale compensation payout for borrowers. Although the Supreme Court largely ruled in favor of lenders, helping them avoid a potential £44 billion bill, Dean’s criticism is aimed at the government’s a priori stance. He states that the Chancellor’s actions demonstrate that the government is “too keen to demonstrate it is on the side of business,” a policy he believes comes at the expense of consumer rights.
The government’s actions were heavily influenced by lobbying from the car loan industry. The Financing and Leasing Association (FLA) and City bosses had warned the Treasury that a massive compensation bill could lead to lender failures, restricted credit for consumers, and a downturn in international investment. They argued that the industry’s interests were aligned with consumers’, as a stable lending market benefits everyone.
However, Dean disputes this claim, arguing that the government’s approach is flawed. He warned that using potential damage to the industry as a reason to block consumer compensation could create a dangerous precedent, as it could be used to undermine almost any redress case. He maintains that strong consumer protection is a vital component of a healthy economy, and that the government’s role should be to uphold these protections, not to protect companies from accountability.