🧾 The FCA’s Proposal to Cut Statutory Interest on Redress: Another Win for Lenders, Another Blow to Consumers

We’ve seen the financial industry time and again put profits before people.

But even by historic standards, the Financial Conduct Authority’s latest consultation—which proposes cutting the statutory redress interest rate—represents yet another staggering failure to stand up for consumer rights.

📉 What’s Being Proposed?

Currently, when consumers are awarded compensation for being mis-sold a financial product or treated unfairly, they are also entitled to 8% per annum statutory interest.

This interest is designed to reflect the loss of use of money and the time value of funds that were wrongly taken or unfairly retained.

Now, the FCA is consulting on reducing that 8% rate.

Let’s be clear: this is not a small technical adjustment.

It’s a blatant erosion of one of the few remaining deterrents to financial firms engaging in misconduct.

⚠️ A Regulator That Won’t Regulate

The FCA claims it wants to “reflect the economic environment” or align with other benchmarks—but this is just regulatory spin.

What this proposal really does is send another loud, clear message to the financial industry:

“Do what you like. If you get caught, you’ll still walk away with a profit.”

This weakening of the redress system removes any meaningful incentive for firms to behave ethically or put consumers first.

It’s yet another sign that the regulator is more concerned about the financial health of the industry than the financial justice of the people it is supposed to protect.

🏦 A Culture of Greed with No Consequence

This isn’t a standalone failure. It’s part of a long-running pattern of regulatory weakness and moral neglect.

Let’s look at the scandals:

• Bank Charges Scandal – Unfair overdraft fees that punished the poorest customers.
• Default Sums Scandal – Unfair credit card and loan late payment fees that accumulated in punitive ways.
• PPI Scandal – Tens of millions of people mis-sold an insurance wasn’t needed or understood.
• Motor Finance Commission Scandal – Lenders and dealerships profiting from secret commissions on finance deals.

Every scandal has seen the finance industry walked away in profit, unscathed at the top despite compensation being paid to some consumers

Now, with statutory interest under threat, even that thin layer of financial justice is being peeled away.

💥 Removing Deterrents Fuels More Misconduct

The 8% statutory interest has always served a dual purpose:

• It compensates victims for the loss of use of their money.
• And more importantly, it penalises firms for bad behaviour.

Remove that penalty, and you remove the last incentive to act fairly in the first place.

The FCA’s consultation doesn’t modernise the system—it emasculates it.

🧭 Where Do We Stand?

At Your Money Claim, we believe:

• The 8% statutory interest is not too high—it is barely adequate.
• The redress system should deter wrongdoing, not minimise its financial impact.
• The FCA must be held to account for its track record of appeasement rather than enforcement.

We call on regulators, lawmakers, and the public to see this consultation for what it is: a direct threat to the fragile promise of justice for mis-sold consumers.

📢 Final Word

If this proposal is allowed to proceed, the message will be clear: regulation is optional, and accountability is negotiable. That’s not regulation—it’s surrender.

We urge consumers and campaigners to make their voices heard in this consultation. Justice without consequence is no justice at all.

YOUR MONEY CLAIM