The City watchdog is facing legal action over its £9.1bn compensation scheme for car loan victims. Consumer Voice is preparing to take the Financial Conduct Authority (FCA) to court in the hope of overhauling the scheme, which it claims massively shortchanges victims.
Consumer Voice Challenges FCA Scheme
Consumer Voice, which partners with law firms to help consumers recover money from rule-breaking companies, argues that the current redress scheme does not deliver fair or lawful compensation for drivers. Co-founder Alex Neill stated, "As it stands, millions of people will be undercompensated, and the lenders involved in this scandal won't be meaningfully held to account."
FCA Defends Its Approach
An FCA spokesperson defended the scheme, saying, "Our scheme is the quickest, fairest way to compensate consumers. It seems contradictory that organisations claiming to represent consumers would seek to delay payouts for millions of people."
Details of the Compensation Scheme
The scheme covers motor vehicle finance agreements mis-sold between 6 April 2007 and 1 November 2024. Approximately 12 million agreements are eligible, with an average payout of £830 per claimant. The total cost of the scheme is estimated at £9bn, down from an earlier estimate of £11bn, partly due to a predicted 75% take-up rate and fewer agreements being included.
Consumer Voice argues that the scheme undercompensates victims and fails to hold lenders accountable. Neill added, "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."
