A massive financial scandal involving car finance deals has emerged, potentially affecting millions of UK drivers who may be entitled to compensation for hidden fees and unfair charges.
The Financial Conduct Authority (FCA) has launched an investigation into discretionary commission arrangements (DCAs) that were commonly used by car dealers and lenders until they were banned in 2021. These arrangements allowed brokers to secretly increase interest rates on car finance deals to earn higher commissions.
Who Could Be Affected?
Anyone who purchased a car on finance between 2007 and 2021 could potentially have a claim, particularly if they used:
- Personal Contract Purchase (PCP) agreements
- Hire Purchase (HP) deals
- Other types of car finance arrangements
Potential Compensation Payouts
Experts estimate that:
- Over 40% of car finance deals during this period may have included hidden commission
- The average compensation payout could be around £1,100 per claim
- The total compensation bill could exceed £10 billion
How to Check If You're Eligible
While the FCA investigation continues, consumers can:
- Gather documentation from their car finance agreements
- Check for any mention of discretionary commission arrangements
- Consider submitting a complaint to their finance provider
The scandal has drawn comparisons to the PPI mis-selling crisis, which resulted in billions being paid back to consumers. Financial experts warn that this could become one of the largest financial redress schemes in UK history.
