The FCA’s Latest Statement: The Mask Slipped, Then It Tried To Put It Back On

The FCA’s latest statement on the legal challenges to its motor finance redress scheme tells consumers everything they need to know.

Not because of what it says, but because of what it carefully avoids saying.

Only days ago, when a legal challenge was brought on behalf of consumers against its heavily watered-down motor finance redress scheme, the FCA reacted with one of the most disgraceful statements we have witnessed from a regulator.

It was “disappointing”.

The appellants “should consider releasing their customers from contract”, conveniently ignoring that these customers may want to be represented.

It would “delay consumers getting their money back”.

It would prolong uncertainty.

It was bad for investment and bad for the market.

Bad for everyone, apparently.

Everyone, that is, except the millions of consumers who would be short-changed by the very scheme the FCA is now so desperate to defend.

The Change In Tone Is Impossible To Ignore

Fast-forward to the FCA’s latest statement, and suddenly the language has changed.

Now that three lenders have also issued legal challenges, Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance, the FCA appears to have discovered diplomacy.

Now it “respects the right” of parties to challenge the scheme.

How very convenient.

When consumers challenge the scheme, the FCA throws a temper tantrum.

When lenders challenge the scheme, the FCA becomes measured, balanced and procedural.

And that, in our view, exposes the FCA’s real problem.

It is obsessed with two things… placating the banking sector and managing public opinion of itself.

Consumer protection appears to come a very distant third.

Lender Challenges Help The FCA’s Façade

The FCA will not be too troubled by lender challenges in the court of public opinion.

Why?

Lender challenges allow the FCA to present itself as the tough regulator standing between banks and consumers.

It helps the façade.

It allows the FCA to say, “Look, the lenders think we have gone too far. We must be doing something right. We’re fighting for consumers”

But a challenge from those acting for consumers is very different.

That does not support the FCA’s carefully polished image.

It threatens it.

A consumer-side challenge risks exposing what this redress scheme really is.

It is damage control, a containment exercise that protects an industry that has unlawfully overcharged the UK public for decades while the FCA was asleep at the wheel… again

It is a way to draw a line under yet another scandal while leaving millions of consumers with less than they are truly owed.

Where Is The Apology?

Read the FCA’s latest statement carefully.

Where is the apology?

Where is the acknowledgement that this scandal did not appear overnight?

Where is the admission that concerns about motor finance commission were raised a decade ago?

Where is the thanks to the professional representatives who fought these issues while the regulator sat back?

Where is the recognition that the FCA did not take this fight to the Supreme Court on behalf of consumers?

Where is the humility?

It is nowhere to be seen.

Instead, the FCA talks about “rebuilding trust” and giving “certainty” to investors.

There it is again.

The market, the lenders, the investors.

The “healthy motor finance market”.

Consumers are mentioned, of course, but they are treated as part of the problem to be managed.

The FCA Wants Praise For A Scheme It Watered Down

The FCA now says its scheme is fair to consumers and proportionate for firms.

This is a scheme that will likely see lenders walk away in profit.

This is a scheme that overlooks consumers who used high interest, sub-prime lenders, the majority of which won’t receive a penny.

So we ask, proportionate for whom?

For the consumers who were overcharged?

For the people who were never properly told how commissions worked?

For the millions who may not receive every penny they should receive?

Or proportionate for the firms that profited from arrangements the courts have found to be unlawful?

The FCA wants applause for designing a scheme that, in our view, protects lenders from the full consequences of their own conduct.

It wants to be thanked for tidying up a scandal it failed to stop, and arguably facilitated.

It wants to be trusted to deliver redress, despite having already shown that its instinct is to balance consumer justice against market comfort.

Trust in the FCA was lost long ago, and it is time for change.

The Attack On Representation Continues

Even in its latest statement, the FCA cannot resist warning consumers that they do not need law firms or claims management companies.

This is the same tired line.

The same attempt to persuade consumers that the very people who challenged wrongdoing, exposed misconduct, gathered evidence and forced progress are somehow unnecessary.

Let us be clear.

Consumers did not create this scandal.

Professional representatives did not create this scandal.

Lenders created it, and the FCA failed to stop it.

So for the FCA to continue wagging its finger at consumers about representation is astonishing.

It did not fight this battle for consumers from the start.

Others did.

Often at their own cost and risk, often while being dismissed, ignored or treated as an inconvenience.

Now the FCA wants consumers to trust the same system that failed them time and time again.

That takes some nerve.

This Is About Public Opinion

The FCA knows exactly what is at stake.

A successful consumer challenge would not simply adjust a formula.

It would shine a very bright light on the FCA’s priorities.

It would invite the public to ask why the regulator’s scheme appears to leave consumers short.

It would raise serious questions about why the FCA has been so determined to make the process “efficient” for firms, “proportionate” for lenders, and “certain” for investors.

It would expose the uncomfortable truth.

The FCA is not frightened of delay.

It is frightened of scrutiny.

Consumers Deserve Better Than Damage Control

This scandal has gone on for far too long.

Consumers have waited, complained and been fobbed off.

Consumers have been told to trust lenders, then told to trust the regulator, then told they do not need help from representatives.

And now, when the watered-down scheme is challenged, the FCA’s first instinct is to blame those trying to secure a better outcome.

That tells us everything about the FCA.

The FCA’s latest statement may be more polished than its earlier tantrum, but the substance remains the same.

Protect the scheme.

Protect the market.

Protect the lenders from the full fallout.

Protect investor confidence.

And somewhere near the bottom of the list, talk about consumers.

An Organisation Unfit For Purpose

The FCA can dress this up however it likes.

It can talk about speed, simplicity, proportionality and rebuilding trust.

Trust is not rebuilt by watering down redress.

Trust is not rebuilt by criticising those who challenge under-compensation.

Trust is not rebuilt by repeatedly warning consumers away from professional help.

Trust is not rebuilt by placing market certainty on the same moral footing as consumer justice.

The FCA had years to act.

It failed.

It still hasn’t issued one single fine against any lender, despite the unlawful actions that have ripped off UK consumers.

It has produced a scheme that, in our view, goes nowhere near far enough.

And now, when challenged, it appears more concerned with preserving its own position than confronting the scale of the scandal.

Consumers deserve full redress and accountability.

They deserve a regulator that is not constantly looking over its shoulder at the banking sector.

The FCA’s latest statement does not rebuild trust.

It confirms why so little trust remains.