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 Crédit 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 - we explain how to do it and the contact details for lenders[2]. You do not need to use a law firm or claims management company, which may charge over 30% of any compensation.