Millions more drivers could be in line for compensation over car finance mis-selling after a major update was confirmed today.
The financial regulator is investigating whether drivers who took out car finance with a so-called discretional commission agreement in place, could be owed thousands of pounds back each. But following an update today, consumer champion Martin Lewis told ITV Good Morning Britain that the regulator is now “paving the way” for all car finance agreements to be investigated.
The Financial Conduct Authority (FCA) has confirmed plans to extend the time that car financing groups have to deal with complaints - and this would apply to all commission types. It expects to publish its decision within the next two weeks - but if taken forward, "would mean the complaint extension is in place by mid-December 2024".
It comes after the Court of Appeal ruled last month that customers must be fully informed about commissions when taking out car loans before an agreement can be entered into. The judgment related to fixed commission in motor finance agreements as well as discretionary commission arrangements. The two lenders involved in the case intend to appeal, according to the FCA.
The FCA said car finance providers were “likely to receive a high volume of complaints” following the ruling. MoneySavingExpert founder Martin Lewis explained the car finance scandal could rival the scale of PPI payouts, and explained how anyone who had car finance could get compensation.
He told Good Morning Britain: “There is a hold on firms dealing with all car finance commission complaints – not just the 40% who had those discretionary agreements where the dealer could increase interest, but on all car finance commission complaints. It is effectively paving the way for all those complaints to be investigated… which would mean potentially, anyone who has had car finance may well be eligible for a payout.”
The FCA said it has spoken to 63 lenders and consumer representatives about the impact of the court ruling. Its original investigation focused on just discretional commission agreements, which were banned in 2021, and includes personal contract purchases (PCP) and hire purchase.
Martin Lewis has recommended anyone who believes they have a complaint, to get this in writing sooner rather than later, in case a timeframe is imposed that could cut off any future complaints. You should make a complaint direct to the lender that provided your car finance.
You can put in a complaint yourself for free. MoneySavingExpert.com has a free tool that will help you draft a template letter to send. You can complain even if the car has been paid off, and you can also complain on behalf of someone else if they've passed away.