FCA boss takes aim at motor finance lenders and claims firms
The boss of the City watchdog has taken a fresh swipe at the parties opposing the regulator’s motor finance redress scheme.
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), told the Treasury Committee that he was “concerned about the integrity of the claims management market” and took a shot at lenders for trying to minimise their compensation payouts.
“What we are dealing with is on one side lenders who didn’t always want to acknowledge that they had harmed consumers… and on the other side a claimants management ecosystem, which is largely seeking to generate as much profit as they can,” Rathi told MPs.
The Upper Tribunal will hear cases from four opponents to the £9bn scheme as late as February 2027.
Volkswagen Financial Services, Mercedes Benz Financial Services, and Crédit Agricole Auto Finance have brought forward a case, arguing that the scheme forced an unlawful blanket assumption that most customers suffered a financial loss if their commissions were not clearly disclosed.
The watchdog branded the lenders’ interpretation of the redress as “absurd,” and said they wanted to “let the foxes guard the hen house”.
Rathi said on Wednesday the FCA would defend the scheme “robustly” in the legal arena. Parts of the program were suspended earlier this month as parties prepare for the courtroom battle.
City PM revealed last month the regulator had written to more than 100 motor finance lenders with concerns over the industry’s preparedness for the scheme.
FCA boss takes aim at ‘integrity’ of claims market
Rathi also took aim at the challenges from the consumer side, which he said included “everything from lead generators who secure referrals for law firms or claims management companies”.
“We are concerned about the integrity of the claims management market,” he said.
He echoed a recommendation from the Civil Justice Council, which called for those who fund high volumes of consumer claim activity to be subject to money laundering registration with the FCA.
“We would support that,” he said, adding “at the very least, that should now move forward as quickly as possible”.
Courmacs Legal is representing Consumer Voice in the Upper Tribunal case.
The regulator has slammed both firms for a serious “want of candour” and accused them of masking motives.
The duty of candour in judicial review is a common-law obligation requiring all parties to proactively disclose all material facts and reasoning to the court.
Both firms “failed to give a full and frank explanation” of their commercial activities and incentives in the scheme, the regulator has claimed.
Alex Neill, the co-founder of Consumer Voice, told City PM the FCA’s accusations were “disgraceful” and “untrue”.
Neill said Consumer Voice had previously been invited to join the regulator’s redress design panel, but now that it was challenging the scheme, it said the regulator was attempting to “discredit” it.