Money-saving guru Martin Lewis has issued a stark warning to UK drivers about a potential car finance mis-selling scandal that could rival the PPI payout frenzy. The consumer champion revealed he's been approached by claims management firms about the issue, suggesting thousands may be owed compensation.
The Growing Controversy
At the heart of the matter are discretionary commission arrangements (DCAs) that were banned by the Financial Conduct Authority (FCA) in 2021. These arrangements allowed car dealers to secretly increase interest rates on finance deals to boost their own commissions.
Who Could Be Affected?
If you took out car finance before January 28, 2021, particularly through:
- Personal Contract Purchase (PCP) agreements
- Hire Purchase deals
you might have been affected by these hidden commission schemes.
What Should You Do?
Martin Lewis advises:
- Don't pay anyone to check your claim - free options exist
- Gather your finance paperwork
- Consider submitting a complaint to the lender
The FCA is currently investigating the scale of the problem, with a decision expected in September 2024 about potential compensation schemes.
Potential Payouts
While amounts vary, some successful claims have resulted in:
- Full refunds of interest paid
- 8% interest on top of refunds
- Average payouts of £1,100
Martin Lewis stressed: "This could be the next big financial scandal. Don't sit on your hands if you think you might be affected."
