The head of the UK’s financial regulator, Nikhil Rathi, is facing allegations that he threatened a consumer advocacy group with “adverse consequences” to prevent them from blocking a £9.1bn compensation package. The proposed scheme is intended to resolve a widespread motor finance scandal involving mis-sold car loans.
Court documents submitted to the UK’s upper tribunal describe the alleged actions of the Financial Conduct Authority (FCA) chief executive as “an inappropriate intervention by a public official.” The incident reportedly occurred during a Microsoft Teams meeting on April 27, just hours before the deadline for filing legal challenges against the regulator’s redress plan.
According to the filings, Rathi warned that the FCA would be “unable to collaborate” with Consumer Voice (CV) if the group pursued legal action. The documents claim he suggested that such a move would lead to “adverse consequences for CV’s future engagement with the FCA and adverse press briefings against it.” The group stated that the implication was clear: the regulator’s willingness to work with them was contingent on their silence, and any challenge would be met with hostility.
Until that point, the FCA had reportedly viewed Consumer Voice as a “trusted expert consumer body.” However, the filings allege that once the group decided to challenge the scheme, the regulator shifted its stance to denigrate the organization’s motives. Rathi allegedly identified the potential legal challenge as the “biggest risk to the scheme,” warning that plans to distribute funds to millions of victims by Christmas would fail if the directors proceeded.
The legal dispute is part of a broader challenge against the terms of the FCA’s compensation model. Consumer Voice, founded in 2023 by former Which? staff members Nikki Stopford and Alex Neill, argues that the scheme undervalues consumer losses. They contend that the average payout of £830 per loan prioritizes the interests of lenders over those of the public. Alongside Consumer Voice, specialist lenders including Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance are also challenging the scheme on separate grounds.
The FCA has sought to dismiss the Consumer Voice claim, alleging that the group lacks transparency regarding its funding and potential conflicts of interest. The regulator has pointed to the group’s relationship with Courmacs Legal, noting that both entities operate for profit in the claims management sector. The FCA claims that because Courmacs has previously hired Consumer Voice for research, the group possesses its own commercial incentives.
Consumer Voice maintains that it partners with law firms to help consumers recover money from companies that violated regulations. While the group receives commissions when members join legal cases, Courmacs Legal has stated it is providing pro bono services for this specific challenge, with earnings tied to the success of larger client settlements.
In response to the allegations, an FCA spokesperson stated that they do not recognize the characterization of the April conversation. The regulator maintained that it spoke with various parties to explain the implications for consumers and that it intends to defend the scheme as the most effective path to compensation. The FCA added that it was unaware of the other lenders’ challenges at the time of the call and continues to engage with Consumer Voice regarding a voluntary charter to address issues like multiple representative claims.
Alex Neill, co-founder of Consumer Voice, affirmed that the group remains “resolute and confident” in its challenge on behalf of millions of consumers who they believe are being short-changed by the current redress proposal. The report also notes that which prompted a contentious intervention by former chancellor Rachel Reeves last year, following intense lobbying by big banks, the episode marks a fresh controversy in the long-running saga surrounding mis-sold UK car loans. The report also notes that lenders have been arguing that a large compensation bill would risk spooking investors and causing long-lasting economic damage to the UK. The report also notes that staffers Nikki Stopford and Alex Neill in 2023, is the only group arguing for bigger compensation for drivers who were overcharged as a result of lenders paying out commission to car dealerships between 2007 and 2024. The report also notes that who fear big bills, ahead of the interests of consumers it is meant to protect, they say the scheme is low-balling consumers – offering average payouts of £830 per mis-sold loan – and is putting the interests of profit-making lenders. The report also notes that 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. The report also notes that ultimately, larger payouts for consumers will boost Courmacs’ earnings, with the firm taking up to 30% of client settlements. The report also notes that “We were also clear that we would be upfront with consumers about why expected compensation would be delayed.”.
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