A legal challenge has been filed against the Financial Conduct Authority’s motor finance redress scheme in an attempt to get more money for affected drivers.
Advice firm Consumer Voice has applied to the Upper Tribunal asking for the way compensation is calculated under the scheme to be changed.
It warned that without change, millions of consumers could be left out of pocket by hundreds of pounds per claim.
Alex Neill, co-founder of the consumer rights organisation, said: “We support a redress scheme being put in place but have launched this action on behalf of millions of consumers because we believe it doesn’t deliver fair or lawful compensation for them.
“It’s no surprise the banks and car finance industry have not challenged the FCA’s scheme – which if implemented now could save them billions. The FCA must fix the scheme and deliver the fair redress that millions of UK motorists are owed.”
Compensation payouts had been due this summer on around 12.1 million unfair motor finance deals at an average of £829 each.
That could now be delayed.
The programme covers unfair agreements taken out between 6 April 2007 and 1 November 2024.
Consumer Voice is not challenging which car finance agreements would be covered by the scheme, meaning lenders involved can start the process of identifying affected motorists.
What has the FCA said?
Responding to the legal action, the FCA said its scheme was the “quickest, fairest and most efficient way to compensate consumers”.
A spokesman added: “It is disappointing that some have decided to challenge it and delay consumers getting their money back, when for many the payouts would be very welcome this year as they face rising household bills.
“This also prolongs the uncertainty for all involved, which is not good for investment or a healthy motor finance market. We are considering our approach and will set out more later this week.”
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