Martin Lewis has warned millions of motorists that their car finance compensation payments are likely to be delayed. This is due to Consumer Voice bringing a legal challenge to alter the way compensation is calculated.
Consumer Voice has warned the Financial Conduct Authority (FCA) that in its current form, the redress scheme could leave millions of consumers out of pocket by several hundred pounds per claim.
The MoneySavingExpert.com founder took to social media to update the millions of Brits impacted by the situation. On X, Martin explained: "Car Finance Mis-selling News – delays likely. The deadline for challenges to the FCA’s planned Mass Redress scheme has now closed. In the end, the only challenge to it isn’t from the car finance industry, it’s from an organisation called Consumer Voice."
Consumer Voice says it “makes money by providing consumer-friendly communications and engagement services to law firms to help raise awareness of claims. In some cases, we take a fee from legal firms when someone from our community joins a claim” (though not it says from Car Finance cases).
Its legal challenge will be run for it 'pro-bono' by claims law firm Courmacs. It argues the redress calculation isn’t generous enough and payouts should be higher.
Lewis said: "I’ve long said the payout proposed is probably lower than you may get in Court (though then most’d likely have to pay claim-firm fees). My guess is the reason the FCA has done this, ironically, was to avoid car finance firm legal challenges."
"Yet even though the hope is bigger payouts, I have some concerns about this for consumers… The most potent is about how much longer this could all take. While Consumer Voice said it hoped there won’t be a delay, the FCA has already said this challenge “will delay consumers getting compensation”. The big question is for how long?"
Lewis speculated on possible outcomes: if Consumer Voice wins the claim at Court, payouts may increase, but the case could be appealed by the motor finance industry, and the FCA may need a short consultation. He suspects a potential delay of many months or up to a year. A source suggested there is a risk the FCA loses and feels it can’t go ahead with the Mass Redress scheme, leaving most people to pursue individual claims or go to Court.
If Consumer Voice loses the claim in Court, payouts will have been delayed with no gain for consumers. There is also the chance of an appeal, adding more time. Lewis concluded: "All in all, I do see this as a gamble taken for millions of people by a relatively small company. We can only hope it pays off."
Alex Neill, co-founder of Consumer Voice, said: "We are taking this unprecedented step to challenge the regulator’s redress scheme because it doesn’t deliver fair or lawful compensation for drivers. We support a redress scheme being put in place, but as it stands millions of people will be under-compensated, and the lenders involved in this scandal won’t be meaningfully held to account."
"The FCA has designed a scheme that leaves ordinary motorists hundreds of pounds per claim out of pocket. That cannot be left unchallenged. The FCA has treated the Supreme Court’s judgment in Johnson as a rigid benchmark in order to exclude most consumers from receiving full commission redress, even though the Court itself acknowledged it was a fact sensitive decision. Its methodology relies on APR benchmarks that underestimate the real harm people suffered, and its interest calculations fall hardest on those who could least afford to be overcharged in the first place."
"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. The FCA must fix the scheme and deliver the fair redress that millions of UK motorists are owed."
