Mercedes-Benz Appeals £9.1B UK Car Finance Redress Scheme Imposed by FCA
Overview of the FCA Redress Scheme and Legal Challenges
By Kirstin Ridley and Sam Tobin
Mercedes-Benz and Other Legal Challenges
LONDON, April 29 (Reuters) - Mercedes-Benz has become the fourth group to challenge a 9.1 billion pound ($12.3 billion) consumer redress scheme imposed by Britain's markets regulator on the UK motor finance industry for misselling historic motor loans.
The Financial Conduct Authority said it had received legal challenges from three lenders as well as from a consumer group to its compensation scheme that had been designed to draw a line under a 17-year scandal.
FCA’s Response and Mercedes-Benz’s Position
"We are considering our approach and will set out more later this week," an FCA spokesperson said.
A Mercedes‑Benz Group spokesperson confirmed the company was appealing against the FCA's scheme but declined to comment further.
Details of the Redress Scheme
The FCA in March trimmed the final bill for one of Britain's costliest financial misselling scandals in an attempt to balance its duty to protect consumers from harm, promote growth and ward off legal challenges.
It had hoped the first payments to customers, who could get an average payout of around 830 pounds per vehicle loan agreement, would start this year. But legal challenges can be lengthy and costly.
Banks’ Reactions and Provisions
Leading banks, however, are not challenging the scheme, although Santander UK, the British arm of Spain's Santander, set aside another 207 million euros ($242.2 million) to cover redress costs on Wednesday.
Banks including Lloyds, Santander, Barclays, specialist lender Close Brothers and the finance arms of vehicle manufacturers have collectively set aside billions of pounds for compensation.
Other Automotive Groups’ Responses
Sky News reported first that Mercedes-Benz planned to challenge the scheme and that Volkswagen was expected to follow suit. Volkswagen did not immediately respond to a Reuters request for comment.
BMW, meanwhile, told Reuters it had reviewed the redress scheme and believed it provided the fastest and easiest route to resolution for customers.
Consumer Group Legal Action
Consumer Voice said on Monday it would launch a legal challenge because it said the FCA scheme failed to deliver fair, adequate or lawful consumer redress.
Currency Exchange Rates
($1 = 0.7408 pounds)
($1 = 0.8546 euros)
Reporting Credits
(Reporting by Kirstin Ridley and Sam Tobin, writing by Kirstin Ridley; Editing by Sharon Singleton)
