The UK Financial Conduct Authority (FCA) is facing four legal challenges against its £9.1bn compensation scheme for victims of the motor finance scandal. The watchdog confirmed a challenge from consumer group Consumer Voice and three lenders.
Consumer Voice claims the scheme massively short-changes victims, and is represented by Courmacs Legal. The FCA also faces challenges from Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance.
The FCA stated it will defend the scheme "robustly" as the fastest, simplest route for consumers and the most efficient way for firms to put things right. However, the legal actions create fresh uncertainty for millions of consumers and for the second largest consumer credit market.
The scheme, finalised in March, will pay about £7.5bn to borrowers and £1.6bn for administrative costs, with an average compensation of £830 per mis-sold loan. Payouts were expected to begin as early as this summer, but the challenges could delay them.
The FCA said it is "engaging at pace" with lenders and consumer groups and conducting contingency planning. The challenges could result in a review by the upper tribunal, where a judge would assess the programme's merits.
