Consumer champion Martin Lewis is urging millions of UK drivers to check if they're owed compensation for potentially mis-sold car finance deals. This comes as the Financial Conduct Authority (FCA) launches a major investigation into unfair commission arrangements in the motor finance industry.
What's the car finance scandal about?
The issue centres on discretionary commission arrangements (DCAs), where brokers and car dealers were incentivised to charge customers higher interest rates. Between 2007 and 2021, many consumers may have unknowingly paid inflated costs for their personal contract purchase (PCP) or hire purchase agreements.
Who could be affected?
You might have a claim if you:
- Bought a car on finance between 2007-2021
- Had a PCP or hire purchase agreement
- Weren't told about commission arrangements
- Paid higher interest rates as a result
How to check if you're owed money
Martin Lewis advises drivers to:
- Gather your old finance paperwork
- Check if the lender used discretionary commissions
- Submit a complaint to the finance provider
- Escalate to the Financial Ombudsman if rejected
The MoneySavingExpert founder warns that claims could take months to process, but stresses that affected consumers shouldn't delay in checking their eligibility.
What compensation could you get?
Successful claimants might receive:
- Refunds of excess interest paid
- 8% statutory interest on top
- Potential compensation for distress
The FCA expects to complete its investigation by September 2024, which could lead to a wider compensation scheme for affected consumers.
