The government’s plans to intervene in several legal matters, including the motor finance case and judicial review challenges, has some lawyers raising their eyebrows.
Chancellor Rachel Reeves revealed on Tuesday her plans for the Treasury to intervene in the mis-sold motor finance scandal, which is predicted to cost the lending industry multi-billion pounds.
This scandal erupted onto the headlines after the Court of Appeal handed down a landmark ruling last year after it was viewed lenders did not receive consent for the commission they charged.
Some lenders are more exposed than others, such as Close Brothers, who are expecting compensation payments to run to £200m, but the entire industry could be on the hook for up to £16bn.
The significance of the Court of Appeal ruling pushed lenders to take it to the Supreme Court. The case will be in front of the justices on 1 April.
‘Brazen attempt to shield lenders’
However, Reeves has now waded in to express concerns over the judgement, warning the ruling may trigger a withdrawal of companies from the sector and prevent customers from accessing credit.
However, consumer focused lawyers have raised concerns at the Treasury’s move.
Sam Ward, director of Sentinel Legal, warned that the Treasury’s “attempt to intervene” in the motor finance case “is a brazen attempt to shield lenders at the expense of consumer rights and judicial independence.”
Rodger Burnett, director and founder of Charles Lyndon said “government intervention risks sending out the wrong message.” He added that the “government’s focus should be to prevent behaviour like this from happening in the first place.”
Darren Smith, managing director of Courmacs Legal, also pointed out that “it cannot be right that in the name of ‘competitiveness’ the Chancellor is willing to give motor finance giants a free pass at the expense of millions of hard-working consumers.”
“What about consumer interests, consumer redress and consumer confidence one might ask,” questioned barrister Rupert Macey-Dare at Minerva Chambers.
Mohsin Patel, co-founder of Factor Risk Management, concluded: “The Supreme Court’s role is principally to interpret and clarify law, particularly where there are ambiguities or disputes about its meaning. In the cases in question, the law has been well established for many years, as confirmed by the Court of Appeal.”
But Patel noted that there will be many who back Reeve’s plan to intervene “in favour of big banks and lenders”.
Ward added that Reeves’ comments raise broader questions about Labour’s intentions. “Their entire election campaign was pro-consumer, pro-putting money back in people’s pockets”.
“This intervention by them is completely opposite to that message,” he added.
‘Reforms must balance access to justice’
In the same week, the Prime Minister vowed that he was “taking on the NIMBYs and a broken system that has slowed down our progress as a nation” in a bid to take “the brakes off Britain”.
The PM confirmed that attempts to challenge major infrastructure schemes via the judicial system will be restricted, all part of an upcoming bill to to stop “blockers” from “using our court processes to frustrate growth”.
There have been several headline grabbing judicial review challenge recently focused on the City, including a court rejecting a JR against M&S plans for its flagship building on Oxford Street and another court green-lighting the redevelopment of London South Bank’s ‘The Slab’.
It is proposed that the law will be changed so if a High Court judge deems a case totally without merit, it will no longer be possible to take it to the Court of Appeal.
Robbie Owen, partner at Pinsent Mason stated that “these changes to judicial review are a small step in the right direction” however he added it does “not move the dial nearly enough to avoid the delays government is rightly concerned about.”
“For those projects that are a critical national priority, the government should require Parliament to approve the consent issued by ministers, as used to be done many years ago, which would then mean that those projects would be immune from judicial review,” Owen added.
While Liz Sawyer of Middle Temple went on to highlight that “careful thought needs to be given to ensuring that the process is clear to potential claimants, but also fair to developers.”
The Law Society of England and Wales president Richard Atkinson warned that “any reforms must balance efficiency with maintaining access to justice”.
He stated that “judicial review plays a vital role in upholding the rule of law by ensuring that decisions on major infrastructure projects are made in accordance with the law.”
“Removing the paper permission stage for these judicial reviews could increase both the cost and length of permission hearings. We believe this would benefit from further analysis before reforms are taken forward,” he added.
This all comes in the same week that the competition watchdog’s chair Marcus Bokkerink was ousted from the position, with lawyers describing the move as “most overtly political” regulatory intervention in recent years.
Speaking on this, Peter Harper, partner at Eversheds Sutherland, described it as “a significant step by the UK government and one that is highly unusual.”
“This is perhaps the most overtly political move we have seen in recent times,” added Jacqueline Vallat, a competition partner at law firm CMS.
Reeves said at Davos that Bokkerink, who joined the Competition and Markets Authority in 2022, was forced out of his role due to a “different approach” on economic growth.