A consumer group is preparing to take the Financial Conduct Authority (FCA) to court, arguing that its £9.1bn compensation scheme for victims of the UK car loan scandal is inadequate. Lawyers for Consumer Voice have notified the regulator of their intention to challenge the redress programme, which they claim shortchanges drivers.
The challenge, which could be filed as early as Friday, would be heard in the upper tribunal and could delay payouts that were expected to begin this summer. The FCA has defended its scheme as the “quickest, fairest way to compensate consumers”, but Consumer Voice argues it unfairly caps interest and narrows eligibility, leaving millions undercompensated.
Consumer Voice, founded by former Which? staffers, has partnered with law firm Courmacs Legal to file the challenge. The group claims the FCA has prioritised lenders’ concerns over consumer protection, resulting in an average payout of just £830 per mis-sold loan. The FCA insists the scheme balances the interests of both borrowers and banks.
If successful, the challenge could increase compensation payouts, which would also boost Courmacs’ earnings as the firm takes up to 30% of client settlements. Consumer Voice co-founder Alex Neill said: “Consumers have been let down by the lenders who mis-sold them car finance. They should not be let down again by the regulator that is meant to protect them.”
