Money-saving guru Martin Lewis has issued a rallying cry to UK drivers, urging them to check if they're eligible for compensation following a landmark Supreme Court ruling on unfair car finance deals.
The decision, which could affect millions of motorists, relates to undisclosed commission arrangements in personal contract purchase (PCP) agreements that were common before 2021.
What's the scandal about?
For years, car dealers and brokers secretly earned hefty commissions by arranging finance deals at higher interest rates than necessary. These hidden payments, often thousands of pounds per sale, were never properly disclosed to customers.
The Supreme Court's recent judgment confirms that such practices were unlawful, opening the floodgates for compensation claims that could total billions across the industry.
Who can claim?
Martin Lewis's MoneySavingExpert website estimates that up to 40% of people who bought cars on finance between 2014 and 2021 might have been affected. The potential payouts could reach £1,000-£5,000 per claim.
Those who purchased vehicles using PCP or hire purchase agreements during this period should:
- Check their original finance paperwork for commission details
- Look for evidence of 'discretionary commission arrangements'
- Gather proof of payments made
How to make a claim
The Financial Conduct Authority (FCA) has launched a major review into the issue, with final rules expected in late 2024. In the meantime, consumers can:
- Complain directly to their finance provider
- Escalate to the Financial Ombudsman if unsatisfied
- Consider professional claims management services
Martin Lewis warns: 'This could be the next PPI-style scandal. Don't wait for the FCA - check your paperwork now. Thousands could be sitting in unclaimed compensation.'
What the industry says
Motor finance firms argue they've since reformed their practices, with full commission disclosure now standard. However, they face mounting pressure to address historical wrongs as consumer awareness grows.
The Financial Conduct Authority estimates over 10,000 complaints are already lodged, with many more expected as the deadline for claims approaches.
