More than one million people could receive thousands of pounds worth of compensation from dodgy car finance deals, with money saving expert Martin Lewis urging motorists to check if they could be included in the refund process.
Drivers who purchased a car, van or motorbike on PCP or Hire Purchase between April 2007 and January 28, 2021, could be owed thousands of pounds after the Financial Conduct Authority launched an investigation into the car finance commission.
Motorists started complaining to lenders about compensation for commission arrangements before law changes were introduced in 2021, which saw the financial regulator ban car dealers from benefitting from models which would have incentivised dealers to raise costs for drivers.
The Discretionary Commission Arrangements (DCAs) allowed lenders to hike interest rates without telling customers about the extra costs they would have had to pay.
Do you have a story you’d like to share? Get in touch by emailingmotoring@gbnews.uk
The FCA is expected to make a decision in September
PA
Martin Lewis initially suggested that the scandal could be as big as the PPI scandal, predicting that millions of drivers could be involved in receiving compensation in a settlement which could breach £1billion.
Earlier in February, the financial expert set up a free car finance complaints tool, which saw more than one million people complaints submitted in just one month.
The investigation is set to conclude on September 25, with drivers having until then to check if they are eligible to receive compensation after being missold car finance.
Writing in the most recent Weekly Money Tips newsletter, Martin Lewis said that the “clock was ticking” for the financial regulator to make an important decision.
He added: “Since the investigation was announced in January, 1.7 million complaints have been made via our free tool alone.
“That investigation is due to conclude on 25 September, and as a conservative estimate, if the FCA rules in favour of mass payouts, that could equate to £750million being repaid for complaints made via the tool.
“With that ruling getting closer, I want to run through both how to complain for those who may be eligible, and, as I’m swamped with questions from those who have, explain the next steps if you’ve complained already.”
Data from the Financial Conduct Authority suggests that 40 per cent of car finance agreements had DCAs, although Martin Lewis suggests that the total is actually far higher – potentially as much as 74 per cent – although they vary by lender.
If someone has already used the complaints tool on the Money Saving Expert website and has been told they had a DCA, the complaint has been logged and they will not need to act until the FCA makes a decision in September.
When a concerned driver receives a notice saying that they did not have a DCA when getting car finance, they were not overcharged, although this also means that they will not receive a payout.
Some motorists may see that their complaint has been “acknowledged”. While this may be frustrating to see that no progress has been made with their complaint, it has been logged, so there may just be a delay with the car lender firm or other related companies.
Based on the use of the Martin Lewis complaints tool, Black Horse has received 17 per cent of the notices, VW Financial Services (excluding Audi) has received nine per cent and MotoNovo and Santander have both made up eight per cent of complaints.
LATEST DEVELOPMENTS:
More than 1.7 million people have used the MSE car finance complaints tool
PA
Many major lenders have already set aside hundreds of millions of pounds in preparation to pay out the hefty compensation rates.
Martin Lewis previously stated that a redress scheme could be introduced where lenders pay compensation to all affected customers or pay money based on a “set formula”.