Millions of UK drivers could be in line for significant compensation after the Financial Conduct Authority (FCA) launched an investigation into potentially unfair commission arrangements in car finance deals.
Consumer champion Martin Lewis has urged affected motorists to prepare their claims, as the regulator examines historic agreements that may have led to customers being overcharged.
What's the issue with car finance deals?
The FCA is focusing on discretionary commission arrangements (DCAs) that were banned in 2021. These allowed brokers and car dealers to set their own interest rates, often charging customers more to increase their commission.
Martin Lewis's MoneySavingExpert website estimates that around 40% of car finance agreements between 2007 and 2021 may have involved these controversial arrangements.
Who could be eligible to claim?
You may have a claim if you:
- Bought a car on finance between 2007 and 2021
- Paid interest on a PCP or hire purchase agreement
- Weren't told about commission arrangements
The average payout could be around £1,100, with some claims potentially reaching £5,000 or more.
How to make a claim
While the FCA investigation continues, Martin Lewis advises:
- Gather your finance documents
- Check if your lender used DCAs
- Consider using the free complaints tool on MoneySavingExpert
The deadline for submitting claims hasn't been set yet, but experts recommend acting now rather than waiting.
What happens next?
The FCA expects to complete its review by September 2024, after which it may order firms to compensate affected customers. Some lenders have already set aside millions to cover potential claims.
This could become one of the UK's largest financial redress schemes since the PPI scandal, with total payouts potentially running into billions.
