Business & Finance
FCA chief accused of threatening consumer group over car loan redress scheme
Legal filings claim Financial Conduct Authority CEO Nikhil Rathi warned Consumer Voice against challenging a £9.1bn compensation plan.
The short version
- Financial Conduct Authority (FCA) chief executive Nikhil Rathi has been accused in court filings of threatening consumer group Consumer Voice with adverse consequences and hostiles press briefings if it challenged a £9.1bn car loan redress scheme.
- Consumer Voice argues that the scheme's average payout of £830 under-compensates consumers overcharged due to dealership commissions between 2007 and 2024.
- The FCA rejected the characterization of the conversation, stated it will robustly defend the scheme, and previously sought to dismiss Consumer Voice's challenge over alleged commercial incentives.
- The legal challenge is currently before the UK's upper tribunal alongside separate challenges from three specialist car lenders.
Key facts
- Legal filings submitted to the UK upper tribunal allege FCA chief executive Nikhil Rathi warned Consumer Voice on an April 27 video call that the regulator would be unable to collaborate with the group and implied potential adverse press briefings if it legally challenged the £9.1bn motor finance compensation scheme.[The Guardian]
- Consumer Voice contends that the proposed average payout of £830 per loan is insufficient for drivers affected by car dealership commission arrangements between 2007 and 2024.[The Guardian]
- Specialist lenders Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance are also bringing legal challenges against the FCA scheme on separate grounds.[The Guardian]
- The FCA previously attempted to dismiss Consumer Voice's challenge, claiming the group and its associated law firm, Courmacs Legal, have commercial incentives and potential conflicts of interest.[The Guardian]
- An FCA spokesperson stated the agency does not recognize the characterization of the call, maintained it was explaining potential compensation delays to consumers, and noted staff have continued to engage with Consumer Voice.[The Guardian]
What remains uncertain
- The factual accuracy of the disputed April 27 conversation remains unverified pending formal court filings and judicial review.[The Guardian]
- The ultimate outcome of the legal challenges by Consumer Voice and the specialist lenders against the £9.1bn compensation scheme is undecided.[The Guardian]