Lloyds Banking Group PLC (LSE:LLOY) shares rebounded slightly on Tuesday as analysts said that the Supreme Court ruling against HM Treasury and Rachel Reeves' attempted intervention in the motor finance case "is good news" for lenders.
The Supreme Court last night refused the Treasury permission to intervene in the case, which is being heard after the Court of Appeal ruled in October that commission payments made by lenders were unlawful.
While this refusal disappointed some investors, with shares in Close Brothers Group PLC (LSE:CBG), Secure Trust Bank PLC (LSE:STB) and Vanquis Banking Group PLC (LSE:VANQ) falling between 8% and 11% over the past two days, analysts at Jefferies said their view was that "the government's point had already been made".
"From a legal perspective, it is arguably more important that the FCA has been granted permission," they added, saying the City regulator's position "could prove instrumental in preventing accessorial liability on the lenders".
The Supreme Court said that permission is only granted where the intervention will add, "significant assistance over and above the assistance it can expect to receive from the parties", with the Jefferies analysts suggesting that the judges may have decided any legal points would be raised in the normal course of the hearing.
The court's ruling on accessorial liability in consumer duty cases may hinge on whether lenders were aware of a fiduciary duty before assessing dishonesty by public standards, the analysts added.
Given the FCA's stance that its rules were not based on such a duty, it may be difficult to establish that lenders dishonestly assisted in a breach they did not recognise.