Drivers risk a delay in £829 car finance payouts as the compensation scheme faces four legal challenges. The UK financial watchdog is facing four legal challenges against its £9.1bn compensation scheme for victims of the motor finance scandal.
FCA Defends Scheme
The Financial Conduct Authority (FCA) said that it will defend the scheme "robustly" as the "fastest, simplest route for consumers and the most efficient way for firms to put things right". The FCA estimates that the total scheme would cost lenders and banks around £9.1bn, with millions of drivers expected to receive an average of £829 per agreement.
Legal Challenges Filed
One of the challenges comes from Consumer Voice, represented by Courmacs Legal, the only limited company to challenge the scheme. Alex Neill, co-founder of the consumer rights organisation, warned that "getting it wrong now would mean underpayment for millions of people to the tune of billions of pounds".
The three other legal challenges were all lodged by lenders: Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance.
FCA's Response
"We will defend the scheme robustly as lawful and the best way to resolve such a widespread, long running and complex issue," the FCA said. "These legal challenges create fresh uncertainty for millions of consumers and for the second largest consumer credit market."
The FCA said that it was "engaging at pace" with lenders and consumer groups to understand the views of all sides as it looked at next steps for the scheme, including "contingency planning".
Support for the Scheme
The FCA added: "We welcome the broad support for the scheme and the commitment from most lenders to implement it. The final scheme is fair to consumers and proportionate for firms. [Lenders] have taken a pragmatic approach recognising that introducing a scheme on this scale promptly has required us to make judgments to simplify in a reasonable and lawful way some complex legal and operational issues. Alternative approaches would be slower and much more costly for firms."
