The government said last month that, while it wanted to make sure customers get re-dress, it also wanted the motor sector to be able to continue “supporting millions of motorists to own vehicles”.
It expressed concerns at the time that the size of the compensation bill for lenders could undermine the competitiveness of UK banks.
A spokesperson for the Treasury said on Monday: “We respect the Court’s decision to not grant our application to intervene… and will monitor it closely”.
The court also rejected applications to intervene in the case from Consumer Voice, a compensation advisor, and trade body the Finance & Leasing Association.
It approved applications from the FCA and trade body the National Franchised Dealers Association.
The court’s time is limited, so it sometimes rejects interventions from parties who it believes may give similar evidence.
Shares in UK banks involved in the case fell on Monday, with Lloyds Banking Group down 4% and Close Brothers Group down almost 15%.
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