The legal battle over compensation for motor finance customers has cranked up another notch, with lawyers accusing the regulator of threatening behaviour.

A claimant-facing group called Consumer Voice has brought the legal challenge against the Financial Conduct Authority over its redress scheme for motorists who were mis-sold finance agreements in the past 20 years.

At the same time, the financial services arms of Mercedes-Benz and Volkswagen have challenged the lawfulness of the scheme. A case management hearing next month will deal with the treatment of expert evidence and disclosure. The Upper Tribunal may also grant permission for a rolled-up hearing involving both the claimants and the lenders.

The scheme is currently partially suspended pending the outcome of legal proceedings.

Court documents filed over the summer have revealed the extent to which parties are at loggerheads, with accusations of lack of candour being made by all sides.

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Consumer Voice argued in its reply to the FCA that the proposed scheme will result in millions of consumers being under-compensated and that the outcome is a ‘windfall for lenders’.

The group, which is said to represented by claimant firm Courmacs Legal (CLL), said the FCA performed a ‘volte face’ when the scheme was challenged. It added that FCA chief executive Nikhil Rathi ‘personally sought to dissuade CV from bringing a challenge by suggesting adverse consequences for CV’s future engagement with the FCA an adverse press briefings against it’. Consumer Voice also said the FCA had sought to ‘denigrate [its] activities and motives’ in bringing the application.

The FCA, in its grounds of response filed with the tribunal, said Consumer Voice had not disclosed details of its funding or the nature of its relationship with  solicitors.

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

‘If it is the case that Consumer Voice has a commercial or other interest in the outcome of the application, that interest may not align with that of consumers or the public interest and indeed may be in direct conflict with it. One of the effects of delay may be to channel more cases through Consumer Voice to CLL (generating remuneration for both).’

Consumer Voice said in its court filing there is no conflict of interest between the group and Courmacs, or its clients.

Alex Neill, co-founder of Consumer Voice, told the Gazette that the FCA has deliberately decided to take over £1bn from car finance victims’ pockets, including from vulnerable consumers, to reduce the compensation bills of big lenders.

She added: ‘We remain resolute and confident in our challenge on behalf of millions of consumers who are being short-changed by the redress scheme.’

The FCA rejects any suggestion it has sought to stamp out the legal challenge by making threats of adverse consequences. A spokesperson for the regulator said: ‘We spoke with a range of commercial parties - including lenders, claim firms and Consumer Voice - before the deadline for a challenge.

‘It was important to explain the implications for consumers and that we would defend the scheme robustly as the best way of getting compensation paid.’