Consumer Voice to challenge FCA redress scheme

Advocacy group Consumer Voice, which had previously called on the Financial Conduct Authority (FCA) to put consumers first in its redress scheme plans, has confirmed that it will seek to challenge the regulator’s final scheme rules at the Upper Tribunal.

According to a BBC News report, Consumer Voice believes that the FCA’s rules, as they stand, leave ‘too many people short-changed’, despite one of the most notable changes in the final rules being an increase in the estimated average redress payment to £829, up from £700 at consultation.

The BBC reported that Alex Neill, co-founder of Consumer Voice, said: ‘Millions of drivers were overcharged through hidden and unfair commission, yet the FCA's scheme risks leaving many of them missing out on hundreds of pounds they're owed.

‘People have already been let down once by lenders. They should not now be let down again by the regulator that is supposed to protect them. The FCA needs to fix the scheme to ensure it delivers fair and lawful compensation for drivers.’

Consumer Voice is specifically looking to challenge the design of the redress scheme, and particularly the regulator’s redress calculation methodology.

The possibility of other challenges remains

Earlier this month, the Financial Times reported that Lloyds Banking Group, one of the most vocal critics of the FCA as its motor finance investigation has unfolded, had decided not to challenge the redress scheme.

It is unknown at this time whether any other consumer group or lender will bring a separate challenge to the scheme, and the regulator refused to comment when asked by the BBC if it had been notified of any others. The deadline for filing a challenge against the redress scheme is Monday, 27 April.

Consumer Voice: The scheme need not be delayed

Although most concerns surrounding the possibility of a challenge to the redress scheme have understandably been centred on the potential for further delays to redress payouts reaching consumers, Consumer Voice told the BBC: ‘The [FCA compensation] scheme should still be able to get up and running, while the Tribunal looks urgently at the parts of the rules dealing with redress.

‘The aim is to fix the flaws, not to stop compensation.’

At present, the redress scheme will begin upon the conclusion of the relevant implementation periods, which run to:

• 30 June 2026 for agreements entered into from 1 April 2014; and
• 31 August 2026 for agreements entered into from 6 April 2007 to 31 March 2014.

Additional challenges from other interested parties may determine whether these implementation dates remain relevant. Irrespective of how many parties challenge the redress scheme, the FCA is likely to lobby the Upper Tribunal to expedite the necessary hearings so that a ruling can be delivered as soon as possible, allowing the scheme to proceed.

What could Consumer Voice’s challenge mean for redress payments?

If the Upper Tribunal determines that the FCA's redress calculation methodology is unfair, the outcome could be an increase in the average redress awarded to consumers. A knock-on effect of any such judgment may also be that some agreements that currently sit outside of scope may become eligible for redress. For example, a change in the redress calculation methodology may be particularly relevant to agreements that will be considered fair in the current version of the final rules if the commission was:

• £120 or less for agreements entered into before 1 April 2014; or
• £150 or less for agreements entered into after this date.

Register your claim with Harcus Parker

The FCA’s motor finance redress scheme means you will be able to claim compensation at no cost and without instructing a professional representative. However, there are several reasons why you may wish to instruct a solicitor to manage your car finance claim.

In addition to verifying lenders’ calculations, irrespective of whether Consumer Voice’s challenge to the current methodology is successful or not, a solicitor can review the broader vehicle purchase transaction and identify if you may have grounds to bring additional claims beyond the FCA scheme, including for mis-sold GAP insurance or irresponsible lending.

If you have yet to complain to your lender about potential hidden commissions in your car finance agreement, you can register your claim with Harcus Parker here.