Kevin Durkin, the solicitor who uncovered the national mis-selling scandal for mis-sold car loans, has warned millions of UK drivers they face a “smash and grab” by lenders on their potentially low level of compensation.
The Financial Conduct Authority’s (FCA) redress announcement last night confirmed a £9.1bn plan with average payouts of £829. This is a significant climbdown from the £30 bn that was projected immediately after HD Law succeeded on behalf of Mr Johnson in the Supreme Court last August.
However, Kevin Durkin, the only lawyer in the UK to successfully take a car finance case to the Supreme Court and win, claims the regulator is systematically “lowballing” the public to protect bank liquidity.
HD Law’s successes, which were obtained by utilising the court system, secured an average of £1,800 for each client - more than double the FCA’s average best case award under the scheme.
Kevin Durkin, Director of HD Law, said: “The FCA has chipped away so much at the Supreme Court’s judgment to the extent that rather than this being a haircut it has become a number two crew cut.
“Any suggestion that the average top award has increased to £829 pounds is like putting lipstick on a pig, when considering the numerous concessions the FCA have made on the scheme in favour of the lenders.
“In the landmark Johnson, the commission was a staggering 55% of the credit charge. The Supreme Court ruled that was an unfair relationship.
“By comparison, the FCA’s new 39% threshold feels like a calculation designed to cap the banks' liability rather than return what is legally owed to the consumer. For many, convenience is going to cost them over £1,000 in lost compensation.”
To help motorists navigate the confusion, HD Law has released an emergency Consumer Guide to ensure drivers aren't "short-changed" by the automated scheme.
The HD Law Consumer Guide: Five things you need to know before accepting FCA redress
1. Check the "Value Gap"
The FCA’s top level average is now £829. The Supreme Court decision suggests where there is an unfair relationship the correct analysis should be reference to the amount of the undisclosed commission. The FCA rules are a significant departure from this to the detriment of the consumer and the financial benefit of the lender.
2. The 31 March 2014 "Split"
The FCA has split the scheme into two to protect against legal challenges from banks. If your deal was before April 2014, your path to compensation is more complex. Do not assume the automated scheme will cover you. You must seek specialist legal advice to properly understand your position.
3. "Free" Isn't Always Fair
The regulator is pushing the "free" route because it’s cheaper for the banks. A specialist law firm doesn't just fill in a form; they litigate for the return of ALL hidden commission plus interest. 75% of a £2,000 award is better than 100% of an £800 settlement. Quite simply they do all the leg work and handle the ‘nasty’ letters from your lender on your behalf.
4. The 60-Second Agreement Finder
Lenders are already citing "high volumes" as an excuse for delays. You don't need to wait for their generic emails. Use an independent agreement finder to retrieve your past PCP or HP deals from the last 17 years in seconds.
5. Don't Sign Away Your Rights
Before accepting any redress payment from a lender, ensure you aren't signing a waiver that prevents you from pursuing the full amount through the courts later. Once you accept a "Full and Final" settlement from the scheme, the door is closed.
Kevin Durkin added: “The banks have set aside billions because they know that following HD Law’s success in Johnson, the game was up and they finally had to accept they owed compensation.
“My advice to motorists is simple: don't let the regulator draw a line under your rights just to suit the banks’ timeline.
“The FCA wants to shortchange drivers all over again. Don’t miss out on hundreds of pounds when you are entitled to a lot more. Seek proper legal advice and gain the protection and expertise from a law firm as soon as you can.”