(Sharecast News) – The Finance & Leasing Association is reportedly preparing for a legal challenge against the Financial Conduct Authority’s motor finance compensation scheme announced last month.
According to Sky News, the trade body – whose members provided £55bn to help consumers buy cars last year – was expected to announce the outcome of its deliberations with members as soon as Sunday.
One source told Sky that a legal challenge to the FCA’s £9.1bn redress scheme was now “overwhelmingly likely”, barring any last-minute hitches.
If confirmed, the decision does not necessarily mean that all FLA members will participate in the legal action. Some, including Santander Consumer Finance are understood to still have been holding their own internal discussions this week about whether to participate in any coordinated industry-wide challenge.
It emerged last week that Lloyds Banking Group had decided not to pursue a legal challenge despite having provisioned close to £2bn for consumer redress payments.
“While we remain disappointed in and disagree with [the FCA’s] conclusions, we believe that moving forward with the scheme is now the right step for our customers and shareholders in support of a clear, orderly and final process that provides certainty for consumers and industry,” Lloyds told the Financial Times.
Under FCA rules, any legal challenge must be brought within 28 days of a redress scheme being launched, meaning that Monday is the deadline for the FLA and other lenders.
FLA members include Santander and the finance arms of automotive groups such as BMW and Volkswagen.
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