The Financial Conduct Authority (FCA) announced 14 million car finance deals included a discretionary commission arrangement (DCA) in the loan contract, which people were unaware of, and may entitle you to compensation
Martin Lewis is urging millions not to miss out on car finance compensation(Image: PA)
Martin Lewis is encouraging millions not to overlook potential car finance compensation of £700, which could be paid out as soon as January or February next year.
The Financial Conduct Authority (FCA) revealed on Tuesday that 14 million car finance agreements included a discretionary commission arrangement (DCA) in the loan contract, unbeknownst to customers. Read here about how Martin Lewis issued an apology after he joked ‘I broke the rules’.
In a video detailing the redress scheme and how to claim the money, the founder of MoneySavingExpert.com (MSE), stated that anyone who purchased a car on hire purchase or personal contract purchase finance between April, 2007, and November, 2024, might be due compensation. For the biggest stories in Wales first, sign up to our daily newsletter here
An estimated four million car finance deals have already been subject to a complaint – leaving around 10 million which could still be raised. The consumer champion urged individuals to utilise the online letter template at MSE.com to ensure they ‘opt-in’ to the compensation scheme. Consumers could have had more than one car loan eligible for compensation.
Martin highlighted that between 2007 and 2024, some 32 million car finance agreements were made, with a staggering 14m likely to have been mis-sold, according to data from the FCA, reports the Daily Record.
The expert provided a step-by-step guide for lodging a complaint and what to do next for those who have already done so.
He explained: “If you haven’t already complained, then the firms have to try and identify all the people who were mis-sold under all these categories and need to get in touch with you within six months of the scheme [starting], but then you’ll have to opt in.
“So you’ll have to actively say ‘I want to be a part of this and I want to get that money.’ Now, in my view – and I suggested this to the regulator boss when I was talking to him about this – in most cases it would be a lot easier if you were in the ‘I’ve already complained’ category. So that means you probably want to put in a complaint NOW, so that you’re in that category by the time the redress scheme starts (if you were mis-sold).”
He strongly advised against using a claims firm as they will charge commission, typically around 30%, for something you can receive for free.
Martin added: “We have a template letter on MoneySavingExpert.com at the moment, but only for discretionary commission arrangements. My team and I will be working in the next couple of weeks doing that for the ‘contractually-tied’ system and the ‘unfairly high commission system’ as well.
“So you’ll be able to complain at that point and then once that’s done, if you do have a case, well, you’ll get the money without doing anything once they write to you.”
The financial expert also explained that for those who believed they were missold, but it happened years ago and they no longer have any paperwork, there are straightforward steps to follow, though the onus is on you to locate evidence.
He explained: “Have you got any proof that you had a car finance deal at that time? I’m saying an old credit reference file that includes it, an old bank statement, or a form where [you can prove that] you were paying them.
“If you do, that could be enough. What they’ll then probably look at is whether that firm was systemically doing one of these categories [of mis-selling] to people in your situation at the time and, if so, it’s possible you will get a payout.
“But if it’s very old and you don’t have the documents and the firm has deleted the documents, then it’s going to be difficult. So if you’re one of those people who nerdily kept all their files from a long time ago, you’re going to be one of the ones who’s most successful.”
If you have already lodged a complaint
For those amongst the four million people who have already submitted a complaint, Martin says the procedure is far more straightforward.
He said: “If you have already put in a complaint and that complaint means you were mis-sold under [the three] categories, once the redress scheme launches – probably in January or February next year – the car finance firm will have three months to write to you and tell you that you’re included in the scheme and then you will automatically be included by doing nothing.
“You can opt out of it [but] once you opt out, you can’t opt back in. But if you don’t do anything, you’re going to get your money.”
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