Barclays has set aside £90m to pay off potential motor finance claims against one of its subsidiaries, it has revealed. The banking giant recognised the provision in its annual accounts for 2024 in light of recent legal and regulatory developments. Notably these include the Court of Appeal judgment in October 2024 against other lenders in three motor finance commission cases.

These cases are subject to an appeal to the Supreme Court which is scheduled to be heard in April. HM Treasury confirmed last month that it would intervene in the litigation amid concerns for the motor finance industry which might have to shoulder up to £30bn in claims, according to some reports.

Barclays, which operated in motor finance through its subsidiary Clydesdale Financial Services Limited, opted out of this market in late 2019, but historical operations before this time may be in scope of any potential Financial Conduct Authority redress scheme.

The company said: ‘Taking into account the information currently available, Barclays has estimated the potential impact of these matters by considering the potential basis for and timing of redress, which complaints may be valid or invalid, and the potential level of such complaints.

‘All these assumptions are subject to significant uncertainty and will be monitored and updated if any significant new information becomes available. The legal and regulatory outcomes and the nature, extent and timing of any remediation action if required remain uncertain and, as a result the ultimate financial impact could differ materially to the amount provided.’

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The Court of Appeal ruled that it was unlawful for car dealers to receive a commission from lenders providing motor finance without first telling the customer and getting their informed consent. The focus of the Court of Appeal decision was common law, equitable principles and the Consumer Credit Act, rather than FCA rules.

The FCA has given firms until December this year to provide a final response to complaints about commissions for motor finance.

If the Supreme Court upholds the Court of Appeal, the outcome could be potentially lucrative for the law firms handling these claims. One of those firms, Consumers Rights Solicitors, estimates that commission was paid on 95% of UK car finance agreements before 2021. The average compensation award for mis-sold finance is around £1,100.