City watchdog attacks consumer group in £9.1bn car loan payout battle

The City regulator is trying to get the only consumer group arguing for higher motor finance scandal payouts thrown out of court, alleging that its co-founders have not been transparent about their funding and potential conflicts of interest.The accusations, laid out in legal filings on Wednesday, are the latest controversy in the long-running saga surrounding mis-sold car loans, with fears of large payouts having resulted in heavy lobbying by banks and a controversial intervention by the chancellor, Rachel Reeves.The Financial Conduct Authority (FCA) is now urging judges to dismiss a string of legal challenges, including by Consumer Voice, “because it has (still) failed to give a full and frank explanation of the nature of its own interest – and that of its solicitors, Courmacs Legal.”Consumer Voice, founded by ex-Which? staffers Nikki Stopford and Alex Neill in 2023, is pushing for bigger compensation for borrowers of car loans, who were overcharged when lenders were paying commission to car dealerships between 2007 and 2024.That would mean far bigger bills for specialists lenders and big banks, including Lloyds Banking Group, Santander, and the finance arms of carmakers like Volkswagen and Mercedez-Benz, who are currently on the hook for a £9.1bn compensation scheme.Consumer Voice argues that the FCA scheme will be low-balling victims – who will get an average payout of £830 per mis-sold loan – and accused the FCA of deferring to lenders’ concerns about big bills at the expense of consumer protection.In legal filings, the FCA suggested Consumer Voice was not being honest about its business model and relationship to Courmacs. “It has failed to disclose details of, or explain, its funding of its application, or the nature of its relationship with its solicitors,” beyond saying that Courmacs was offering representation on a pro-bono basis, the legal filings said.Both firms, “operate for profit in the sphere of claims management”, the FCA said, adding that Courmacs had previously hired Consumer Voice to conduct consumer research on its behalf. The consumer group “therefore has commercial incentives of its own.”Consumer Voice partners with law firms, with an aim to help consumers “get back money they’re owed from rule-breaking companies”. It has promoted claims against the likes of Amazon, Facebook, Mastercard, Apple iCloud, and Sony PlayStation, and makes money by doing communications work for law firms to raise awareness of their claims. It also receives a commission when its members join one of the law firms’ cases, according to its website.Courmacs, based in Blackburn, is providing pro bono services in the case against the FCA. Ultimately, larger payouts for consumers will boost Courmacs’ earnings, with the firm taking up to 30% of client settlements.The FCA accused Consumer Voice of having “failed to be candid”, and claimed it “arguably has misrepresented” why it was bringing the case.It said the two firms were “arguably not aligned with those of consumers” and urged judges to “refuse permission to Consumer Voice to pursue its application”Neill said it was “disgraceful that a public body would include allegations in legal pleadings despite having been repeatedly informed that they are untrue. Public authorities should be held to the highest standards of accuracy and fairness, not make claims that risk misleading the court and the public.”She stressed that Consumer Voice “make no money whatsoever from car finance mis-selling referrals.”