A public spat has erupted in the landmark motor finance litigation, between City regulators and a self-styled consumer champion funded by law firms.

The Financial Conduct Authority is seeking to have Consumer Voice thrown off the case over possible conflicts of interest. In legal documents published this week, the regulator argues that Consumer Voice has ‘failed to be candid’ about and ‘arguably misrepresented’ the basis for its involvement in the litigation.

Consumer Voice reacted furiously, accusing the FCA of ‘disgraceful’ conduct that risks ‘misleading the court and public’.

The FCA advances the claims in legal pleadings relating to Consumer Voice’s challenge to the regulator’s Car Finance Redress Scheme. Consumer Voice has ‘failed to comply with its duty of candour [by failing] to disclose details of or explain its funding of its application or the nature of its relationship with its solicitors, [Blackburn-based claims practice] CLL [Courmacs Legal Ltd], either generally or in the context of CLL’s acting for it in these proceedings beyond saying that CLL is acting “pro bono on behalf of Consumer Voice in this application for review”,’ the regulator argues.

Consumer Voice has ‘failed to give a full picture of the commercial relationship between it and CLL, in circumstances where both entities operate for profit in the sphere of claims management’, it adds.

The FCA concedes that it is ‘not in itself objectionable if Consumer Voice and/or CLL have some commercial or financial motivation in the outcome of the application’. But it adds that the Upper Tribunal should refuse permission to Consumer Voice to pursue its application because the organisation ‘has, at least, failed to be candid about the issue, and arguably has misrepresented the basis on which, and purpose for which, its application is brought’.

Consumer Voice, which is funded by fees and contributions from law firms, was founded by two consumer rights advocates who formerly worked for Which?.

In a statement, co-founder Alex Neill said: ‘Consumer Voice is a purpose-for-profit organisation. We have repeatedly made clear to the FCA, both in correspondence and in a sworn witness statement, that we make no money whatsoever from car finance mis-selling referrals. We have no financial interest in the outcome of this legal challenge. The only thing we stand to gain is fair, lawful redress for the millions of consumers who have been failed by both lenders and the regulator that was supposed to protect them.

‘It is disgraceful that a public body would include allegations in legal pleadings despite having been repeatedly informed that they are untrue. Public authorities should be held to the highest standards of accuracy and fairness, not make claims that risk misleading the court and the public.’

She added: ‘Last year, the FCA invited Consumer Voice to join its car finance consumer redress scheme design panel, recognising the detailed consumer research we have undertaken into car finance redress. Now that we are challenging the FCA’s approach, it is seeking to discredit us. That raises serious questions about why the FCA has chosen to attack the only legal challenge brought on behalf of consumers.’