UK Regulator Chief Accused of Threatening Consumer Group Over £9.1bn Car Loan Payout Scheme
The head of the UK's Financial Conduct Authority, Nikhil Rathi, is accused of threatening consumer group Consumer Voice to dissuade it from legally challenging a £9.1bn compensation scheme for mis-sold car loans. The dispute is now before a tribunal, alongside separate challenges from specialist lenders.
Nikhil Rathi, chief executive of the UK's Financial Conduct Authority (FCA), is facing allegations of inappropriate intervention after reportedly threatening consumer group Consumer Voice with "adverse consequences" if it pursued legal action against a £9.1bn redress scheme for mis-sold car loans.
According to legal filings reviewed by the Guardian, the alleged comments were made during a Microsoft Teams call with Consumer Voice's directors on 27 April, just hours before the deadline for filing legal challenges against the FCA's proposed compensation scheme.
The documents claim Rathi warned that the FCA would be unable to collaborate with the group if it went ahead with a challenge, implying hostile press briefings and a breakdown in engagement. Until that point, the filings say, the FCA had treated Consumer Voice as a trusted expert body, but its stance shifted once the group decided to contest the scheme. Rathi is also said to have described the potential legal challenge as the biggest risk to the scheme, warning it could derail plans to deliver payouts to millions of victims by Christmas.
The filings further allege that Rathi did not disclose that three specialist lenders — Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance — were also weighing their own challenges, only stating that the FCA had been "engaging with the banks," who ultimately decided not to proceed.
Part of a longer saga
The episode is the latest twist in a prolonged controversy over mis-sold car loans in the UK, stemming from commission payments made by lenders to car dealerships between 2007 and 2024. Consumer Voice, founded in 2023 by former Which? staffers Nikki Stopford and Alex Neill, is the only group pushing for larger payouts, arguing the scheme's average compensation of £830 per loan is too low and favors lenders' interests over consumers'.
The FCA has, in turn, sought to have Consumer Voice's claim dismissed, alleging the group has not been transparent about its business model and its relationship with law firm Courmacs Legal, which it says creates potential conflicts of interest.
An FCA spokesperson disputed the characterization of the call, saying it was important to explain the implications for consumers and that the regulator would defend the scheme robustly. Consumer Voice co-founder Alex Neill said the group remains resolute in its challenge on behalf of millions of consumers.
