Consumer champion Martin Lewis has issued a stark warning about a looming crisis in the car finance industry, as thousands of drivers prepare to challenge potentially unfair deals.
The Coming Complaint Avalanche
The MoneySavingExpert founder revealed his team is being "inundated" with queries about car finance agreements, particularly those arranged between 2014 and 2016. This surge follows growing awareness about hidden commission arrangements that may have disadvantaged consumers.
FCA Steps In
The Financial Conduct Authority (FCA) has launched a major investigation into discretionary commission arrangements (DCAs), where brokers could set interest rates while earning higher commissions. This practice was banned in 2021, but may have affected millions of earlier agreements.
What Drivers Need to Know
- Complaints must first go to the finance provider
- The Financial Ombudsman Service can review rejected claims
- Time limits apply - typically six years from agreement date
- No upfront fees should be required to make a complaint
Lewis cautioned: "We're potentially looking at another PPI-scale situation here. If you've had car finance in the past decade, it's worth checking if you might be owed compensation."
How to Check Your Agreement
- Locate your finance paperwork
- Look for any mention of "discretionary commission"
- Check if the broker had flexibility to set your interest rate
- Compare your rate with typical market offers at the time
The FCA's investigation continues, with potential compensation schemes being considered if widespread misconduct is found. Experts advise affected consumers to gather documentation now rather than waiting for final rulings.
