Link(s):
FCA responds to High Court motor finance judicial review decision | FCA
Clydesdale Financial Services Ltd, R (on the application of) v Financial Ombudsman Service Ltd – Find Case Law – The National Archives
Context
The High Court of Justice, King’s Bench Division, Administrative Court has published its judgement in the Clydesdale Financial Services Ltd (trading as Barclays Partner Finance) Judicial Review of the key FOS Ombudsman decision that found against it in a motor finance commission complaint brought to FOS by Ms Jenna Lewis originally in December 2021. The Ombudsman decision was issued in January 2024, and Clydesdale / Barclays sought a Judicial Review of the Decision. The judgement has dismissed all three grounds for appeal. The Ombudsman’s decision, therefore, stands.
Key points to note and next actions
- Clydesdale / Barclays has said that it will seek to appeal, citing that this challenge “…related to a single, specific case on which we disagreed with the Financial Ombudsman Service’s decision…” and that it is “…disappointed in the court’s ruling and will be appealing.”
- The FCA has welcomed the additional clarity the judgment brings to discretionary commission arrangement (DCA) complaints, saying that the Judge found that the Ombudsman had interpreted FCA Rules and the Consumer Credit Act 1974 correctly when deciding that the lender and car dealer involved in this case did not meet the relevant standards in place at the time.
- The Ombudsman was entitled to find that the dealer and the lender did not adequately disclose their commission arrangements to the borrower, and that the relationship between the lender and the borrower was unfair in those circumstances.
- Alongside this judgement, the Supreme Court recently confirmed it will hear an appeal against the Court of Appeal’s judgment in three other motor finance cases involving DCAs and non-DCAs. The appeal relates to the application of common law, equitable principles and the Consumer Credit Act, rather than FCA rules.
- The FCA is currently reviewing the use of DCAs in the motor finance market before its 2021 ban. The review seeks to understand if there was widespread misconduct related to DCAs, if consumers have lost out and, if so, the best way to make sure any compensation owed is received in an appropriate settlement in an orderly, consistent and efficient way. This is clearly the FCA considering some form of formal and organised redress procedure.
- In relation to extending the time firms have to respond to motor finance complaints where a non-DCA was involved, the FCA has said that it will publish its policy statement confirming the outcome of our consultation by 19 December 2024.