Key facts
- FCA CEO Nikhil Rathi is accused of threatening Consumer Voice with adverse consequences if they challenged a £9.1bn car loan compensation scheme.
- The alleged threat occurred during a call hours before a legal challenge deadline.
- Consumer Voice argues the scheme offers low payouts and prioritizes lenders' interests over consumers'.
- The FCA denies the characterization of the conversation and defends the scheme.
- Consumer Voice co-founders Nikki Stopford and Alex Neill founded the group in 2023.
The head of the UK's financial regulator, Nikhil Rathi, is accused of threatening a consumer group with "adverse consequences" if it blocked a £9.1bn compensation scheme for mis-sold car loans. Legal documents reviewed by The Guardian suggest Rathi warned Consumer Voice (CV) during a Microsoft Teams call on April 27 that the Financial Conduct Authority (FCA) would be "unable to collaborate" with the group if it pursued legal action.
The filings claim Rathi suggested "adverse consequences for CV’s future engagement with the FCA and adverse press briefings against it," implying that the FCA's willingness to engage constructively was contingent on CV not challenging the scheme. This marked a shift from the FCA's previous stance, where it had treated CV as a "trusted expert consumer body."
Rathi allegedly stated that a legal challenge from CV was the "biggest risk to the scheme" and would jeopardize plans to compensate millions of victims by Christmas. The documents also note that it was not disclosed that three specialist lenders – Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance – were also planning to challenge the scheme.
Consumer Voice, founded by former Which? staff members Nikki Stopford and Alex Neill, is arguing that the scheme's average payouts of £830 per mis-sold loan are too low and that the FCA is prioritizing the interests of profit-making lenders over consumers. The FCA has attempted to have CV's claim dismissed, citing concerns about the transparency of its funding and potential conflicts of interest, particularly its relationship with its lawyers, Courmacs Legal.
An FCA spokesperson stated that the organization "don't recognise the way this conversation has been characterised" and emphasized the importance of explaining the implications for consumers and defending the scheme robustly. The FCA also claimed they were unaware of the specialist lenders' challenges until after the call and that engagement with CV has continued. Consumer Voice co-founder Alex Neill remains "resolute and confident" in their challenge.