Legal Challenge Filed Against UK’s £9.1bn Car Finance Redress Scheme by Consumer Group
Consumer Group Disputes FCA’s Motor Finance Compensation Plan
Background of the Redress Scheme
LONDON, April 27 (Reuters) - A British consumer group on Monday said it had filed a legal challenge to a 9.1 billion-pound ($12.32 billion) redress scheme to compensate motorists for mis-sold motor finance, a move Britain's market regulator described as disappointing.
Last month, the Financial Conduct Authority unveiled a trimmed-down, final bill amid a pushback from lenders, which came after the United Kingdom's top court overturned a landmark ruling that had sent shockwaves through the industry.
Industry Response
Lenders’ Position
Lenders including Close Brothers and Santander have decided not to challenge the FCA's redress scheme, which the FCA said would allow consumers to receive compensation quickly.
Consumer Voice’s Legal Challenge
Criticism of the Scheme
But Consumer Voice, which said it has applied to London's Upper Tribunal to challenge the redress scheme, argues it "fails to deliver fair, adequate or lawful consumer redress and systematically undercompensates consumers".
The group said in a statement that it believes "consumer redress has been minimised in order to protect lenders".
Potential Impact on Consumers
The FCA said the move could delay consumers receiving compensation and "also prolongs the uncertainty for all involved, which is not good for investment or a healthy motor finance market".
"We are considering our approach and will set out more later this week," the FCA said.
Exchange Rate Information
($1 = 0.7387 pounds)
Reporting Credits
(Reporting by Sam Tobin; Editing by Daniel Wallis)
