Our objective has been, and remains, to ensure consumers receive
fair compensation as quickly as possible and to maintain a
healthy motor finance market.
An industry wide scheme is the fastest, simplest route for
consumers and the most efficient way for firms to put things
right and give certainty to their investors. Alternative
approaches would be slower and much more costly for firms.
We engaged widely in designing the scheme. While being clear not
everyone would get everything they would like, we made changes to
reflect feedback from both consumer groups and lenders. The final
scheme is fair to consumers and proportionate for firms.
We welcome the broad support for the scheme and the commitment
from most lenders to implement it. They have taken a pragmatic
approach recognising that introducing a scheme on this scale
promptly has required us to make judgements to simplify in a
reasonable and lawful way some complex legal and operational
issues.
We recognise that for some lenders this has been a difficult
decision. We appreciate that they have ultimately decided to put
a resolution for their customers first, many of whom have been
waiting for more than two years for an answer. They have also
chosen to provide certainty for investors and to help rebuild
trust in the market.
However, we have received four legal challenges: one from
Consumer Voice (a limited company), represented by Courmacs Legal
Ltd; and three from lenders - Volkswagen Financial Services,
Mercedes Benz Financial Services, and Credit Agricole Auto
Finance.
We respect the right of any party that the Courts decide has
standing to challenge the scheme. We also note that none of the
claims received are expressly in the name of individual
consumers.
We will defend the scheme robustly as lawful and the best way to
resolve such a widespread, long running and complex issue.
These legal challenges create fresh uncertainty for millions of
consumers and for the second largest consumer credit market, with
£39bn borrowed in 2024. We are therefore engaging at pace with
lenders and consumer groups to understand the breadth of views as
we determine next steps for the scheme, including contingency
planning.
We will provide further advice to firms next week. Our current
advice to consumers remains that the best step, if you have
concerns, is to complain directly to your lender. This is
free, and our website explains how to
do it and the contact details for lenders. You do not need to use
a law firm or claims management company, which may charge over
30% of any compensation.
