The FCA’s Tantrum Over a Challenge to Its Watered-Down Redress Scheme

The FCA’s response to the legal challenge against its motor finance redress scheme is as revealing as it is infuriating.

Its complaint appears to be that the challenge could delay compensation to consumers, but that point falls apart the moment you look at the timeline.

The unlawful conduct at the heart of this scandal was being raised directly with the FCA as far back as 2016.

It was not acted on then. It was not stopped then. It was allowed to continue.

So for the FCA to now act as though the problem is delay is beyond absurd.

The delay was created by the FCA’s own inaction.

A Decade Too Late

Consumers have already waited years for justice.

They waited while lenders continued to profit and they have waited while complaints were unfairly rejected.

They waited while the regulator did what it does best when faced with serious wrongdoing by large financial firms… move slowly, say little, and avoid confrontation with the banking sector.

And here we are after years of doing far too little, the FCA has the nerve to point the finger at those challenging a scheme that is arguably designed to protect lenders from the full consequences of what they have done.

The FCA has shown its true colours time and time again.

The FCA Did Not Fight This Battle

There is another point the FCA would no doubt prefer people ignored.

It was not the FCA that took this fight to the Supreme Court on behalf of consumers.

It was not the FCA that put its own money, resources or reputation on the line to force this issue into the open.

It stood back and allowed others to take the risk.

Professional representatives fought these cases, pursued the arguments, invested the time, the money and the expertise.

They did so while the regulator was asleep at the wheel, yet again.

And now the FCA once again has the cheek to suggest that consumers do not need the help of professional representatives.

If consumers had relied solely on the regulator to protect them, these issues would still be buried.

A Scheme Built to Please Lenders

The real issue here is not simply about what the FCA has said, but about what it has built.

This redress scheme is heavily watered down, and has all the hallmarks of a regulator trying to keep the industry comfortable while offering consumers just enough to make the problem go away.

A fair scheme would return all money consumers were wrongly charged.

It would reflect the seriousness of the misconduct, and fines would be handed to those involved.

It would not be designed in such a way that lenders can absorb the scandal, draw a line under it, and still come out of the process in profit from the unlawful commission arrangements.

The lenders were never going to be happy until they were protected.

The FCA knew that, and once again it appears to have bent over backwards to make sure they are.

Consumers Come Last. Again.

This is the recurring problem with the FCA.

Time and again, when it comes to standing up to the banking sector, it goes soft.

It talks tough in headlines, then delivers something far more cautious behind the scenes.

It speaks of fairness and balance, but the balance always seems to land in favour of firms with deep pockets, expensive lawyers and powerful lobbying influence.

Meanwhile, ordinary consumers are expected to be grateful for whatever falls off the table.

It is nothing but damage control.

The FCA exists to protect consumers, not to design solutions that lenders can live with, but throughout this scandal it has looked far more concerned with market stability, lender exposure and political pressure than with making sure the public gets back every penny it is owed.

The Legal Challenge Has Exposed the Truth

What seems to have really irritated the FCA is not the substance of the challenge, but the fact that someone has dared to challenge it at all.

That is what makes its response so telling, and borderline amusing.

It is abundantly clear that the FCA would not have reacted in the same way if lenders had brought the challenge.

There would have been no embarrassing public temper tantrum.

Instead, there would likely have been understanding, careful language, and ‘respect for the legal process’.

But when the challenge comes from the side of consumers, or from those trying to ensure consumers are not short-changed yet again, the FCA suddenly finds its voice.

That tells you everything.

The FCA Has Shown Its True Colours

This entire episode has stripped away any remaining pretence.

The FCA was warned but it failed to act while others fought the battle for justice.

The FCA then produced a heavily diluted scheme, and rather than accepting scrutiny, it has responded like a stomping toddler that has dropped their ice cream.

It does not like being challenged, nor being reminded how late it was.

It certainly does not like being confronted with the reality that its redress scheme leaves lenders in a far stronger position than consumers.

But that is where we are.

The FCA has shown its true colours throughout this scandal.

It was weak when firmness was needed, and cautious when courage was required.

It was far too willing to listen to lenders and government, and far too slow to act for the public it claims to protect.

That is why this challenge matters.

If this scheme does not deliver full and proper redress, it deserves to be challenged.

And if that makes the FCA uncomfortable, so be it.

Final Word

The FCA cannot sleep through a scandal, water down the response, and then complain when someone objects.

Consumers have already paid the price for its failure.

They should not now be expected to accept less than they are owed simply to spare the regulator embarrassment or the lenders expense.

The real delay was created years ago.

The real scandal is the misconduct.

And the real outrage is that, even now, the regulator still seems more offended by the challenge than by the wrongdoing itself.