The government has stepped in to save car loan companies from potentially having to shell out billions in compensation payments.
The move comes amid fears the compensation payments could have a serious impact on the motor finance market.
Last year the Court of Appeal ruled lenders should have been clearer with customers in communication on how much commission they were making from the selling of loans, and that they must pay out compensation.
Two of the car finance sector's biggest firms, MotoNovo and Close Brothers, are set to appeal the ruling in April.
But now, the BBC reports, the government has weighed in, stating that while it wants to ensure wronged customers are compensated, it also wants to make sure the sector is able to continue "supporting millions of motorists to own vehicles".
Some experts have estimated payouts could reach £30billion, which would see it become the largest financial product compensation scheme since PPI.
The Treasury's submission to the Supreme Court raises concerns over the size of the compensation bill and the potential for any uncertainty to undermine the UK's competitiveness.
The BBC understands the the Treasury's intervention may be a bid to demonstrate the UK is still in a positive position to do business as chancellor Rachel Reeves visits the World Economic Forum in Switzerland to speak to world leaders.
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