A consumer group is preparing a legal challenge to a major compensation scheme for drivers who were mis-sold motor finance agreements, raising the prospect of delays to payouts expected this summer.
The scheme, introduced by the Financial Conduct Authority, is estimated to cost lenders £9.1 billion and would provide average payments of around £829 per person. It was designed to allow affected drivers to claim compensation without needing legal support or court action.
However, Consumer Voice argues the scheme is too limited. It claims that while 12.1 million agreements are included, a further 4.7m mis-sold deals have been excluded entirely. The group also disputes how compensation amounts have been calculated, saying many consumers could receive less than they are owed.
The challenge will be submitted to the Upper Tribunal, which handles disputes involving regulatory decisions. Legal paperwork is expected to be filed imminently.
At the centre of the issue are discretionary commission arrangements, which the FCA banned in 2021. These deals allowed car dealers to earn higher commissions by increasing the interest rates they charged customers, often without clear disclosure. The regulator found this created a clear conflict of interest, leaving many drivers paying more than necessary.
Consumer Voice is working with law firm Courmacs, which represents over a million drivers pursuing claims through the courts rather than the FCA scheme.
While the group insists payouts should not be delayed, further legal challenges, potentially from lenders, remain possible before the deadline.
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