Consumer redress schemes: the case of CFO Lending Limited
This article by George Mallet was first published in Butterworths’ Journal of International Banking and Finance Law.
Since 2010 the Financial Services Authority (FSA) (now Financial Conduct Authority (FCA)) has had the ability to impose consumer redress schemes, requiring firms to review past business, determine whether they have caused customers loss as a result of breaches of their regulatory obligations and, if so, to pay compensation.
The powers, when granted, were regarded by many as controversial, as they permitted the FSA to determine not only a firm’s liability for past conduct but also the compensation to be paid. The schemes therefore allow the FCA to bypass the usual court processes.
However, consumer redress schemes have proved to be an effective and efficient way of ensuring recompense for consumers who have lost out due to a firms’ poor behaviour.
The Consumer Rights Act 2015 introduced US-Style “opt out” class actions for competition infringements known as “collective proceedings”. The government has previously proposed the use of collective proceedings in financial regulation cases. It will be interesting to see whether the CRA 2015 will pave the way for collective proceedings in financial regulation cases.
In this article, George considers the benefits of consumer redress schemes in light of the redress recently provided to customers of CFO Lending Limited.
To read the article in full, please see here.
This article forms part of an ongoing series being written by members of the Henderson Chambers Banking Finance and Consumer Credit group for the Butterworths’ Journal of International Banking and Finance Law.