This month Professor Henry Blair, Services Director MILS, looks at a potential FCA redress scheme, new group litigation rules for consumers, and the possibility of relaxed ZEV targets
As we accelerate into Spring 2025, in this edition of the Legal Surgery, Professor Henry Blair looks at a potential Supreme Court ruling that could trigger an FCA redress scheme, new group litigation rules that make it easier for consumers to band together, and the possibility of relaxed (or at least recalibrated) ZEV targets.
Q: What’s this potential “redress scheme” the FCA is on about?
A: As we all know, the Supreme Court hears the Johnson, Wrench, and Hopcraft this week. The Court of Appeal’s ruling hinted that motor finance firms might be liable whenever commissions were not adequately disclosed to customers. If the Supreme Court upholds that stance, the Financial Conduct Authority (“FCA”) has stated it’s “likely” to propose an industry-wide redress scheme. In plain terms, firms might be required to identify and compensate any affected consumers without waiting for them to bring individual complaints.
A redress scheme would change the entire playing field. Rather than customers individually pursuing complaints or claims through courts—which can be inconsistent, costly, and protracted—a redress scheme would likely place the onus on motor finance firms and dealers to proactively identify affected consumers and provide compensation according to FCA-prescribed rules. While this structured approach would dramatically simplify the process for consumers, potentially eliminating reliance on claims management companies and courts, ensuring that consumers retain the full compensation awarded, it could also increase administrative burdens on firms and accelerate when liabilities will be felt by the industry.
While motor finance providers will likely shoulder most of the load under a redress scheme, dealerships are not immune. Given their central role in commission disclosures and finance arrangements, dealerships could face significant pressure, particularly if finance providers attempt to recover losses or seek indemnities. We are therefore urging all our dealership clients to rigorously audit not only their ongoing finance practices, but their historical practices in order to be best prepared for what could be a turbulent summer and autumn.
Of course, it’s possible a redress scheme will not be created. The FCA has postponed any final announcement on redress until at least six weeks after the Supreme Court’s ruling—so keep an eye on late spring 2025 for clarity.
Q: What’s an “omnibus action” and what’s it got to do with the motor industry?
A: You might have seen some buzz around discretionary commissions and an “omnibus action” in the past couple of weeks. That’s because, on 4 March, the High Court, in Stuart Angel and Others v Black Horse Limited, provided a crucial precedent, endorsing omnibus forms in motor finance commission claims and overturning an earlier requirement for claimants to file individually.
So, what’s an “omnibus action?” The concept sounds properly obscure, but it’s quickly becoming one of the most significant legal developments in recent years. Omnibus actions are collective claims enabling thousands of claimants who share similar grievances to pursue their cases together. Until recently, many courts hesitated to allow groupings this broad. Indeed, the High Court in Stuart reserved a lower court ruling that would have forced more than 5,000 claimants to file commission cases individually.
Importantly, the ripple effects of omnibus actions stretch far beyond commission claims. The procedural shift to more collective redress opens the door wider to mass consumer rights litigation generally. It may soon be viable to efficiently handle large-scale disputes that were previously impractical. Omnibus actions reduce costs, streamline judicial management, and facilitate settlements by resolving common legal issues in lead cases.
The motor industry, frequently a focus of consumer rights claims—from defective products to misrepresentations—can expect increased group litigation, taking the place of what would have traditionally been one-off small claims. The ripple effects could reshape how dealerships and finance companies manage legal risk and customer complaints, urging proactive compliance measures and careful evaluation of business practices that could attract large-scale scrutiny.
Q: Is the ZEV mandate going to change?
A: Probably. Right now, the ZEV mandate calls for 28% of new vehicles to be zero emission by the end of this year, rising steadily to 80% by 2030. But recent statements from Business Secretary Jonathan Reynolds suggest “substantial” tweaks may be in the works—especially in response to manufacturers (like Nissan) warning that unrealistic targets could harm investment in the UK’s motor industry.
So far, industry reactions have been decidedly mixed. Advocates for charging infrastructure have warned that any dilution of the mandate could jeopardise critical investments in EV infrastructure. Conversely, manufacturers seeking greater flexibility welcome the potential adjustment, arguing it aligns market realities with environmental objectives.
With similar shifts occurring across Europe, where the EU recently relaxed its emissions targets under pressure from carmakers, it seems likely that the UK will follow suit, adopting a more pragmatic stance. The motor industry should closely monitor announcements from the government and prepare for potentially revised compliance frameworks, which will affect both immediate strategic planning and long-term investment decisions.