The UK financial regulator has confirmed it should defend its £9.1 billion redress scheme after receiving 4 legal challenges, warning the motion risks delaying resolution for thousands and thousands of consumers and creates fresh uncertainty for the broader market.
The Financial Conduct Authority (FCA) said its objective “has been, and stays, to make sure consumers receive fair compensation as quickly as possible and to keep up a healthy motor finance market”, insisting that an industry-wide scheme stays essentially the most cost effective and efficient option to resolve the problem.
“We are going to defend the scheme robustly as lawful and the most effective option to resolve such a widespread, long running and complicated issue,” it said.
Legal challenges confirmed
The FCA said it had received 4 legal challenges: one from Consumer Voice represented by Courmacs Legal and three from lenders – Volkswagen Financial Services, Mercedes Benz Financial Services and Credit Agricole Auto Finance.
Read Motor finance redress: from commission to compensation
The regulator said it respected the fitting of parties to challenge the scheme although noted that not one of the claims had been brought directly by individual consumers.
FCA scheme goals
The regulator said it had engaged widely with each lenders and consumer groups in designing the scheme, making changes to reflect feedback while acknowledging that not all parties would agree with every aspect.
“An industry wide scheme is the fastest, simplest route for consumers and essentially the most efficient way for firms to place things right and provides certainty to their investors,” it said.
The FCA also welcomed what it described as broad support from most lenders, praising their “pragmatic approach” in committing to implement the scheme despite its scale and complexity.
Pragmatism praised
Nevertheless, it acknowledged that some firms faced difficult decisions and said it appreciated people who had prioritised delivering an final result for purchasers, lots of whom have been waiting greater than two years.
The regulator said it’s now engaging with lenders and consumer groups to evaluate next steps including contingency planning, adding that it plans to supply further guidance to firms next week.
Within the meantime, it repeated its advice to consumers to complain on to their lender in the event that they have concerns, stressing that that is free and doesn’t require the usage of claims management firms which can charge greater than 30% of any compensation.
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