Chancellor's Backroom Deal Sparks Fury in Car Finance Scandal
📷 Image source: i.guim.co.uk
A Political Hand in the Cookie Jar
How the Chancellor Tried to Quiet a Growing Storm
The Chancellor’s office thought they could slip this one past us. Late Friday, as the country tuned out for the weekend, word leaked that Jeremy Hunt had quietly reached out to the Financial Conduct Authority (FCA) about the escalating car finance scandal. Not to demand justice for the millions fleeced by predatory lending schemes, mind you—but to 'manage the fallout.'
Sources inside the FCA say Hunt’s team pressed for 'moderation' in any punitive measures against lenders, arguing that aggressive action could 'destabilize' the auto finance sector. That’s political code for protecting the profits of banks and dealerships that allegedly inflated interest rates for over 1.2 million drivers, many of them low-income workers already stretched thin by the cost-of-living crisis.
The Scandal That Won’t Die
Why This One Hits Different
This isn’t just another financial sector mess. The car finance debacle has become a symbol of how ordinary people get ground up by systems rigged against them. Between 2019 and 2023, lenders like Black Horse (Lloyds’ auto finance arm) and Santander Consumer UK routinely tacked on hidden commission fees—sometimes as high as 50% of the loan value—without customers’ knowledge. The FCA’s own estimates suggest borrowers were overcharged by £1.6 billion collectively.
What makes it worse? These weren’t luxury car buyers. The hardest hit were delivery drivers, care workers, and tradespeople who relied on financed vehicles to earn a living. When the FCA finally launched its probe earlier this year, the public outrage was visceral. Which is exactly why Hunt’s backchannel maneuvering reeks of betrayal.
The Backlash: From 'Disgraceful' to Demands for Resignation
Labour’s shadow Treasury secretary, Tulip Siddiq, didn’t mince words: 'For the Chancellor to lobby regulators on behalf of loan sharks while families choose between car payments and groceries isn’t just tone-deaf—it’s morally bankrupt.' Even Tory backbenchers are distancing themselves, with one describing Hunt’s move as 'a gift to Reform UK.'
Consumer rights champion Martin Lewis, whose MoneySavingExpert site first exposed the scale of the scandal, tweeted: 'When politicians interfere to soften blows for financial misconduct, they become accomplices.' The timing couldn’t be worse for Hunt, who’s already facing heat over stagnant wage growth and NHS waiting times. Number 10’s terse 'no comment' suggests even the PM’s team recognizes this as a political grenade.
What Happens Next
The FCA’s Dilemma
The FCA now finds itself in a bind. Its preliminary report, due next month, could recommend mass compensation orders—potentially dwarfing the £12 billion PPI payout. But with Treasury pressure in the background, critics worry the final ruling might be watered down.
Legal analyst Imogen Cooper notes the regulator’s independence is technically enshrined in law, but 'soft power from Whitehall has derailed weaker settlements before.' All eyes are on FCA chief Nikhil Rathi, a former Treasury official himself, to see if he’ll bend or hold the line.
Meanwhile, class-action lawsuits are multiplying faster than ministers can spin them. Leigh Day Solicitors has already signed up 16,000 claimants, with more joining daily. As one claimant, a Nottinghamshire ambulance driver, put it: 'They bet we wouldn’t notice the small print. Now they’re betting we’ll forget. We won’t.'
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