LONDON ― Britain’s banks have been dealt a major blow in their effort to avoid payouts for a growing motor finance scandal. Sealed court filings obtained by POLITICO show that judges on the Court of Appeal believe there are “no arguable grounds” for lenders to appeal a ruling that could leave them on the hook for substantial redress. The Court of Appeal’s Oct. 25 ruling declared it unlawful for lenders to have paid a commission to car dealers without borrowers’ knowledge and consent. The banks have signaled they will appeal the ruling. But the court filings show the Court of Appeal moving to block requests by defendants FirstRand Bank and Close Brothers to have the case reheard at the Supreme Court. Ultimately the decision to grant an appeal is taken by the Supreme Court. But the view that there should be no rehearing of the case is an unusually bold one by the Court of Appeal, and will be taken into consideration by the U.K.’s highest court. “It is not the general practice of this Court to give reasons for refusing permission to appeal, but in the light of the postscript to the judgment, the Court wishes to make it clear that it takes the view that the proposed grounds of appeal are unarguable and/or would make no difference to the outcome on the facts of the present case,” the sealed order says. A spokesperson for the Supreme Court said the companies involved can still file a “permission to appeal (PTA)” directly to the court. “They have 28 days to do this from the day of the judgment hand-down in the Court of Appeal. So far, the [Supreme Court] has not received a PTA in this case,” the spokesperson said. HIDDEN COMMISSIONS If upheld, the decision would be a huge blow to lenders hoping to get the case quashed in the Supreme Court. The Oct. 25 ruling from the Court of Appeal judged that commission arrangements in motor finance deals sold to consumers were secret and illegal unless the borrower gave express consent. The hidden commission meant consumers paid more for car finance. The deals relate to car finance agreements made between 2007 and 2021, where car dealers forced consumers into higher rates in their contracts in return for extra pay from lenders. The U.K.’s City watchdog, the Financial Conduct Authority, outlawed these deals in 2021.  The FCA opened an investigation into discretionary commission arrangements in January, but granted lenders a delay on their response time to customer complaints, until December 2025. The pause was to allow for the outcome of legal rulings, including the Court of Appeal’s Oct. 25 judgment. That judgment opens up possible redress for additional motor finance complaints, however, as it takes a view on all types of commission deals. The FCA’s chief executive said the regulator is considering a plea from lenders to allow them to delay responses to these complaints, too. Before the ruling, analysts predicted total payouts from lenders could reach £16 billion, although this figure may grow further due to the inclusion of additional commission arrangements. Lloyds Banking Group has already set aside £450 million for potential redress, while Santander delayed its third-quarter results following the ruling. RBC Capital Markets increased its estimated compensation for Lloyds to £3.2 billion, while Santander is expected to pay £1.4 billion. Law firm Courmacs is considering handing over 20,000 complaints in the next week for contracts with commissions not affected by the FCA pause, and expects around a million in total including the ones subject to the delay until Dec. 2025, according to its managing director, Darren Smith. Several carmakers have temporarily halted sales to customers due to the court ruling and FCA probe. 

The U.K.’s growth forecast was upgraded Wednesday by the Organisation for Economic Cooperation and Development (OECD) in some good news for the new Labour government. The OECD revised Britain’s GDP growth for this year and next, forecasting it to hit 1.1 percent in 2024, up from 0.4 percent in its previous May projection, and 1.2 percent in 2025.  U.K. economic growth was described by the OECD as “robust,” with Britain set to rank joint second among G7 countries this year, behind the U.S, although it looks set to be overtaken by the eurozone next year, which is forecast to grow 1.3 percent. In less good news, the OECD projects the U.K. will have one of the highest rates of inflation in the G7 over the next year or so, with the economic forecaster projecting headline inflation — which was 2.2 percent in August — will be 2.7 percent across 2024, and is on course to increase by 2.4 percent next year.  The updated forecast follows the Labour Party’s conference in Liverpool, where Chancellor Rachel Reeves gave a speech aimed at injecting some optimism into the political rhetoric before the Oct. 30 budget, after several gloomy warnings that Labour inherited an ailing economy. “Faster economic growth figures are welcomed, but I know there is more to do and that is why economic growth is the number one mission of this government,” Reeves said in response to today’s figures. “Next month’s budget will be about fixing the foundations, so we can deliver on the promise of change and rebuild Britain.”