Guest post by Jamie Patton, managing director of Johnson Law Group
Patton: Regulator should work with solicitors
Nearly a decade after the Financial Conduct Authority (FCA) began investigating the car finance industry, the story of the PCP commission scandal is still unfinished.
The recent legal challenge to the FCA’s redress scheme by three lenders and Consumer Voice looks set to delay matters further before consumers finally begin receiving compensation payments for historic overcharging.
So, what happens when a similar issue arises again? How might those responsible for consumer protection act faster, collaborate better and restore trust?
Regulatory response times must match the speed of harm
Almost nine years passed between the FCA’s initial investigation in 2017 to the launch of a redress scheme in 2026.
It took four years for the FCA to ban controversial commission models causing harm after beginning its investigations into the industry, three more years to announce a redress scheme and a further three years to launch one. That is far too long.
There seems to be no good reason why the regulator announced a second wave of investigations into the motor finance industry in 2024, five years after its first report. In the meantime, the car finance industry has continued to withhold compensating victims.
Decisive action could and should have quickly followed the release of the FCA’s report in March 2019. It identified overcharging was taking place, it did not need to wait until matters got all the way to the Supreme Court before doing anything about it.
Regulators should treat claimant lawyers as partners, not pariahs
One of the most striking lessons from the PCP saga is how poorly regulators understood the role of claimant law firms.
While the FCA, Solicitors Regulation Authority and even Martin Lewis warned consumers off using lawyers, it was claimant solicitors who forced legal breakthroughs.
Without their persistence in pursuing cases all the way to the Supreme Court in Johnson & Wrench v Close Brothers and Hopcraft v First Rand Bank [2025] UKSC 33, there would likely have been no redress scheme at all.
The FCA seems to be offended at the thought that some people may wish to pay for representation. Many of us could complete our own tax returns but choose not to because accountants understand the process better and it’s an administrative burden that people don’t have the time for.
You don’t see HM Revenue & Customs commissioning an advertising campaign against accountants!
Painting all representatives as opportunistic or unnecessary undermines rightful access to justice. Yes, there are some bad actors capitalising on uncertainty but there are plenty of reputable firms too.
Law firms are businesses and we need to make money but it’s the mission of delivering justice that gets us out of bed in the mornings.
The regulator should work with solicitors or, at the very least, refrain from encouraging otherwise happy clients to sever ties with their lawyers – thus exposing them to the risk of being sued.
Build transparency before the courts mandate it
Unfortunately, consumers and their advisors have had to rely on litigation simply to uncover the facts pertinent to the question of liability in a financial mis-selling case. This is because banks often refuse to comply with their obligations to disclose such information at the initial complaint stage.
Rather than acknowledge that this behaviour has led to complaints being made to the Financial Ombudsman Service (FOS), the FOS has also criticised law firms for bringing “speculative” claims on behalf of their clients.
The wrongdoing is clear – precise details are hidden by the banks. But claimants and their lawyers are criticised.
In the future, when a systemic practice is banned, firms should be compelled to disclose relevant contract and commission information proactively. This transparency would cut down on uncertain claims and ease pressure on the FOS and the courts.
Improve access to justice and consistency in the county courts
The county courts are under immense strain and understandably wary of being swamped by the next wave of consumer litigation.
Yet one reason the system became overwhelmed by car‑finance mis‑selling cases is because defendant banks face little downside in denying liability when most claims are placed on the small claims track, where costs cannot be recovered.
This cost-free defence encourages blanket denials and delays, with banks gaming the system to hold onto money they should be paying back to their customers.
A centralised and consistent court approach is also needed to avoid a postcode lottery. Many claimant lawyers will tell you about the lack of consistency in approach (and justice) for similar financial mis-selling claims in different county courts.
When a scandal of this sheer size and scale is identified, the courts should act to ensure uniform processes and directions are applied.
Design a redress scheme that is opt-in, clear and time-bound
For future schemes, simplicity should trump universality. Consumers should be required to register but given streamlined digital tools, plain-English guidance and clear deadlines. That encourages engagement and realism about what payouts are likely.
The FCA’s philosophy of automatically including every former customer of a bank into a redress scheme will result in millions being spent by the banks in attempting to chase down old contact details for customers who entered into agreements nearly 20 years ago.
That money could be spent compensating those who are genuinely hurt by the banks’ actions and are motivated to do something about it.
Regulators should also commit to publishing the methodology behind any ‘hybrid remedy’, including assumptions, discount rates and caps. Redress formulas that are seen as mysterious or inconsistent merely drive further litigation.
Rather than attempt to ‘lawyer shame’ anyone who wishes to use legal representation, the FCA should just be up front about the fact that a redress scheme represents a compromise: you’ll get less than your legal entitlement but quicker.
Encourage judicial guidance at the top
As with Johnson, when a judgment is so significant that it must be released after the financial markets close, it should also serve as a moment to clarify the law.
The Supreme Court’s decision in Johnson was careful but narrow, resolving one man’s case without offering wider guidance on what circumstances might render a consumer credit agreement unfair.
Future appellate courts should use landmark cases like this to lay down broader obiter principles, helping regulators, firms and consumers understand how fairness should operate across similar situations.
Clearer judicial direction at the top would prevent years of uncertainty and inconsistent interpretation in the courts below.
In conclusion, the PCP saga shows how quickly trust between regulators, the legal profession and consumers can erode when caution turns into delay which in turn leads to recrimination, uncertainty and a loss of faith in regulators and the rule of law.
A swift-acting regulator and clear process and direction from the courts could massively improve access to justice as well as financial market certainty.
Alison Walters, the FCA’s director of consumer finance will be speaking at our Claims Futures conference [1] on 21 October. We will also have an in-depth session on the current state of car finance claims.