MPs have pushed back against some of the UK's largest lenders, who claimed that the car finance scandal had not caused any "harm", despite millions of people potentially being impacted.
Drivers are awaiting the conclusion of a Supreme Court judgement as to whether financial providers should provide compensation after being accused of using discretionary commission arrangements (DCAs) to increase interest rates.
The Supreme Court is expected to deliver a verdict on the car finance scandal in the coming weeks, having heard arguments from lenders at the start of April.
The Financial Conduct Authority has stated that it will only clarify further details once the Supreme Court has responded. It is anticipated that this will lead to a form of redress scheme.
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Drivers are still waiting for an update on the car finance scandal and whether they could receive compensation
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At a meeting of the Treasury Commons Select Committee, Bobby Dean, Liberal Democrat for Carshalton and Wallington, quizzed a number of bosses from some of the nation's biggest lenders.
He accused them of "hiding behind a legal definition of harm" after Charlie Nunn, CEO of Lloyds Banking Group, denied claims that harm had taken place.
Dean added that he had met with constituents who had been impacted by the car finance scandal, with one saying they had been "duped".
The Lib Dem MP added: "There were advanced commission payments paid that they weren't aware of, they were trusting their broker as an honest broker and is acting in their interest.
READ MORE: Martin Lewis offers hope for drivers ahead of Supreme Court's car finance scandal decision
Bobby Dean, Liberal Democrat for Carshalton and Wallington, quizzed the bosses of major lenders on the car finance scandal
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"They were told that this was the best possible deal they could get, but when they dug beneath the surface, they found out that they're paying sky-high interest rates. Do you not think that actively is harm?"
Dean, who has been an MP since 2024, said one of his constituents, who relied on their car for work, had to take out a loan for their car, but the intermediary was working in the interests of the lender, not the consumer.
Charlie Nunn, CEO of Lloyds Banking Group, rejected claims that drivers had been harmed by brokers who were acting in the interests of the lender.
He noted that brokers tend to focus on other things, like looking after the value of a trade-in vehicle and whether the driver may need alternative features like paint protection.
Nunn added: "When we look at indiviudal cases, that we will obviously look at, I've looked at them looking back, but when we gete clarity from the Supreme Court and the FCA, it's looking at that combination of the factors that determines whether the customer actually got the right deal or whether they were harmed.
"And as I said, at this stage, we haven't had evidence of harm, but if it were identified, we would lean into it."
Dean pushed back, arguing that drivers were not given an honest deal because lenders were focused on advanced commission payments, which Lloyds operated through its Black Horse subsidiary.
Lloyds Banking Group have set aside a staggering £450million in anticipation of the outcome of the car finance scandal.
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Charlie Nunn, CEO of Lloyds Banking Group, denied that 'harm' had taken place
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Nunn said: "We welcome the Supreme Court, we definitely welcome the FCA stepping in, and our hope is, if we can get that clarity, we can then move forward and focus on the individuals, which is really the important part."
He added that the future of the car finance market hinges on the FCA's legal findings of the Supreme Court verdict, noting there is a "broad range of scenarios" that could disrupt the industry.
The CEO continued: "Lloyds Banking Group is in a very strong position, but some of those scenarios are difficult, so the next six months or 12 months, depending on the FCA to fully respond, will be really important."
Other lenders appeared at the Treasury Committee, including Ian Stuart, CEO of HSBC UK, Vim Maru, CEO of Barclays UK, and Paul Thwaite, CEO of NatWest Group.
