Durkin: Backing challenge
The Financial Conduct Authority (FCA) has told solicitors and claims management companies (CMCs) challenging its motor finance redress scheme that they should give their clients the chance to end their retainers.
In an escalating war of words following the announcement that consumer rights group Consumer Voice is to challenge the scheme [1] in the Upper Tribunal, one of the solicitors involved in the landmark Supreme Court case accused the regulator of “hypocrisy”.
In a statement issued yesterday, the FCA emphasised that it had “no vested interest” in setting up the scheme – Consumer Voice and lawyers have accused it of placing too much emphasis on limiting the financial impact on lenders.
“What matters to us is getting fair compensation for consumers as quickly as possible and supporting a healthy motor finance market for the future,” it said. “That’s what our scheme will do, and it’s free for consumers to use.”
It said any law firm or CMC involved in a potential challenge against the scheme that also has clients making claims “should consider their position and that of their clients carefully”.
The FCA continued: “At the very least, they should write to those clients to explain they’re involved in a challenge that’s likely to delay compensation.
“They should give those clients the option of exiting the contract and strongly consider waiving any fees.”
It said consumers should not be “made to wait” longer for compensation, with some having already waited over two years for a response to their complaint.
Millions of affected agreements “did not involve the particularly serious misconduct identified in the case considered by the Supreme Court”, it added.
Meanwhile, the solicitor who acted on the successful claim at the Supreme Court has hit back at the FCA’s “hypocritical” reaction.
Kevin Durkin, director of HD Law, said: “It sits ill in the mouth of the FCA to reference delay when it has been investigating this area for almost 10 years before setting down a clear policy only last month. This in itself was accelerated by HD Law succeeding on behalf of Mr Johnson in the Supreme Court last August.”
Mr Durkin continued to argue that the regulator has been systematically “lowballing” compensation to protect bank liquidity.
He said: “I welcome this challenge to the FCA’s flawed motor finance compensation scheme. The concerns being raised reflect obvious issues with the scheme, which, in its current form, leaves many consumers undercompensated.”
While the challenge may result in a “short-term delay”, Mr Durkin said, “we hope it can deliver a fairer, more equitable outcome for consumers overall. Let’s hope that any potential delay results in more money in the public’s pockets. Short-term pain for long-term gain.
“If the challenge succeeds, it could ensure that affected individuals receive the compensation they deserve, reinforcing trust in the process. Let’s just hope that this is expedited swiftly.”