The Financial Conduct Authority has insisted that it will “robustly” defend its motor finance compensation scheme after several companies launched legal challenges against it.
However, the FCA has also conceded it is considering the “possibility of suspending some elements” of the scheme for now because of the legal uncertainty.
The watchdog said it is unclear when the challenges will be taken to court, but it is unlikely to be before October.
The FCA said it would provide another update on how parts of the scheme could be delayed and what will happen next as soon as possible.
Advice firm Consumer Voice, Volkswagen Financial Services, Mercedes-Benz Financial Services and Credit Agricole Auto Finance have all lodged challenges against the £9.1bn scheme.
The FCA said the companies have argued that the rules governing the scheme are unlawful and have used the Upper Tribunal to invalidate them on that basis.
“Many people will be frustrated that the legal action will delay payouts due to begin this year. We remain committed to ensuring consumers receive any compensation owed as promptly as possible,” it said.
“Our industry-wide scheme is the quickest, fairest and most cost-effective way to do this. As we have said, we welcome the commitment of most lenders to implement the scheme and will defend it robustly.”
Drivers who believe they are entitled to compensation through the scheme have been encouraged to lodge complaints directly with their lender.
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