The Financial Conduct Authority (FCA) is facing a battle with claims management companies over a £1 million advertising campaign aimed at discouraging drivers from using their services to claim compensation in the car loan scandal.
The regulator plans to use online influencers, including Cameron 'Cazza' Smith, to tell consumers they can apply for free and should avoid claims companies that take up to 30% of payouts in fees. The FCA's proposed £18 billion compensation scheme follows a Supreme Court ruling in August that upheld a consumer complaint over commission arrangements between lenders and car dealers.
However, claims firms accuse the FCA of prioritising big banks and pushing consumers towards 'low-ball' offers. Darren Smith of Courmacs Legal said the FCA appears to be 'pressuring victims to accept low-ball offers' that may not reflect the full extent of harm. Lizzy Comley of Slater and Gordon expressed concern that the campaign risks undermining the role of law firms in protecting consumer rights.
The FCA has said borrowers should expect no more than £950 per complaint through its scheme. An FCA spokesperson stated: 'Only around half of consumers know they don't need to use a CMC or law firm to claim. It’s important they’re equipped to make a choice.'
Lenders have made provisions for potential compensation, with Lloyds setting aside £1.2 billion, Santander UK £295 million, Close Brothers £165 million, FirstRand £122 million, and BMW's financial arm £200 million.
