The chief executive of the UK’s financial regulator has been accused of warning a consumer group of “adverse consequences” if it challenged a proposed £9.1 billion compensation scheme aimed at resolving the motor finance scandal.
According to The Guardian, Financial Conduct Authority (FCA) chief executive Nikhil Rathi allegedly told Consumer Voice that the regulator would be “unable to collaborate” with the organisation if it pursued legal action against the scheme.
The alleged comments were made during a Microsoft Teams call with Consumer Voice directors on 27 April, just hours before the deadline for legal challenges to the FCA’s proposed redress programme for consumers who were mis-sold car finance.
Court filings claim Rathi warned that legal action could have “adverse consequences” for Consumer Voice’s future relationship with the FCA and could lead to negative media briefings against the organisation.
The documents describe the alleged intervention as “an inappropriate intervention by a public official”, arguing that the FCA appeared to link its willingness to work with Consumer Voice to whether the group challenged the scheme.
Consumer Voice had previously been regarded by the FCA as a “trusted expert consumer body”, according to the filings. However, the documents allege that the regulator’s approach changed after the organisation decided to challenge the compensation programme.
Rathi is also alleged to have described the challenge as the “biggest risk to the scheme”, warning that it could jeopardise plans to begin paying compensation to millions of affected consumers by Christmas.
The filings claim Consumer Voice was not told that three specialist lenders were also preparing legal challenges. Instead, the group was told the FCA had been “engaging with the banks” after lenders decided not to challenge the plans.
The claims form part of wider proceedings before the UK’s Upper Tribunal challenging the FCA’s compensation scheme.
