UK regulator moves to block bigger car loan payouts
Britain's financial watchdog is asking courts to dismiss a consumer group's push for larger compensation, a move that would shield major European banks and automakers from billions in additional costs.
The UK’s Financial Conduct Authority (FCA) has asked judges to throw out legal challenges seeking higher compensation for victims of the motor finance mis-selling scandal. In filings submitted on Wednesday, the regulator targeted Consumer Voice, the only consumer group arguing for larger payouts than those proposed in a recent £9.1bn scheme.
The watchdog accused Consumer Voice and its solicitors, Courmacs Legal, of hiding their financial motives. The FCA argued that both entities operate for profit in the claims management sector and failed to disclose how the litigation is funded. While Courmacs is officially providing pro bono representation, it stands to earn up to 30% of any increased client settlements.
Consumer Voice rejected the allegations. Co-founder Alex Neill called the FCA’s behaviour “disgraceful”, stating the public authority risked misleading the court. She insisted the group makes “no money whatsoever from car finance mis-selling referrals” and stressed that public bodies must be held to high standards of accuracy.
The dispute centres on compensation for mis-sold car loans issued between 2007 and 2024, a period when lenders paid undisclosed commissions to car dealerships. Under the FCA’s current framework, affected borrowers would receive an average of £830 per loan.
Consumer Voice argues this figure shortchanges victims and accuses the regulator of prioritising lender concerns over consumer protection. Dismissing the challenge would be a major relief for the institutions on the hook for the costs. The list of exposed lenders includes Lloyds Banking Group, Santander, and the finance arms of German carmakers Volkswagen and Mercedes-Benz.
The scandal has already triggered heavy lobbying from the banking sector and prompted a controversial intervention by Chancellor Rachel Reeves. The FCA’s aggressive move to clear the field of legal challengers signals an effort to finally cap a financial liability that has rattled some of Europe’s largest lenders.
