UK government accused of letting big banks off the hook as £2bn tax loophole revealed.
Taxpayer money could be on the line after it emerged that the UK's top financial regulator, the City minister Lucy Rigby, has effectively waved through a £2 billion tax loophole that would otherwise see lenders such as Barclays and Santander pay out an estimated £11 billion in compensation to car loan victims.
A loophole was revealed last month where banks with 'non-bank entities' divisions – essentially branches of their main banking arm that aren't technically part of it – could circumvent a 2015 rule meant to ensure big bank payouts are factored into corporation tax. This has left specialist lenders involved in the scandal, including car manufacturers' finance arms, also exempt.
The Financial Conduct Authority is set to outline its next steps on an £11 billion car loan compensation scheme by February or March but consumer advocacy groups and lenders have already been critical of the regulator's initial proposal. The proposed plan has been accused of being too complicated and costly for consumers, leaving them struggling with crippling debts that they had taken out to buy cars.
The City minister's decision not to intervene in this loophole has been condemned by Labour as 'completely unacceptable'. Treasury committee member Bobby Dean claims that big banks are "siding against the industry over consumers and taxpayers".
Taxpayer money could be on the line after it emerged that the UK's top financial regulator, the City minister Lucy Rigby, has effectively waved through a £2 billion tax loophole that would otherwise see lenders such as Barclays and Santander pay out an estimated £11 billion in compensation to car loan victims.
A loophole was revealed last month where banks with 'non-bank entities' divisions – essentially branches of their main banking arm that aren't technically part of it – could circumvent a 2015 rule meant to ensure big bank payouts are factored into corporation tax. This has left specialist lenders involved in the scandal, including car manufacturers' finance arms, also exempt.
The Financial Conduct Authority is set to outline its next steps on an £11 billion car loan compensation scheme by February or March but consumer advocacy groups and lenders have already been critical of the regulator's initial proposal. The proposed plan has been accused of being too complicated and costly for consumers, leaving them struggling with crippling debts that they had taken out to buy cars.
The City minister's decision not to intervene in this loophole has been condemned by Labour as 'completely unacceptable'. Treasury committee member Bobby Dean claims that big banks are "siding against the industry over consumers and taxpayers".
. They keep letting these huge banks off the hook, and it's just getting more and more outrageous. I mean, £2 billion is a pretty big number, but when you think about how many people are affected by this car loan scandal, it's like they're playing with fire 
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. It's time for some real change! 
. It's not right that they can avoid paying out billions of pounds to car loan victims just because their non-bank entities division is technically separate from them. I mean, come on Lucy Rigby, how could you let this happen? 
The fact that Labour and Bobby Dean are calling it "completely unacceptable" shows me they're not wrong either. It's time for some accountability from these financial giants. They need to be made to pay up! 
. £2 billion tax loophole for big banks? that's just peanuts to them, but it's a huge hit on car loan victims who are already struggling to pay back their debts 
. this is not how tax laws should be written, it's all about special treatment for the rich and powerful 
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... 2 billion quid is just too much! And now we find out that some dodgy banking setup allows them to avoid paying their fair share? Like, what's going on in the city, fam? 
Barclays and Santander are basically being let off the hook because of some fancy loophole. It's just not right 
... consumer groups have a point when they say the proposed scheme is too complicated. I mean, who thought it was a good idea to give people crippling car loan debt in the first place? 
I'm so done with these bank loopholes! Did you see the stats on the £2bn tax loophole? 
. labour is right on this one tho - its time for some real change. these big banks need to be held accountable and make sure they're contributing fairly to our economy