Martin Lewis issues urgent reminder to drivers who may be owed £1,000s
MARTIN Lewis’ MoneySavingExpert.com (MSE) has issued an urgent reminder to drivers who could be owed thousands of pounds.
The consumer website is encouraging motorists to check via a free tool if they’re eligible for cash after unknowingly paying out too much on car finance.
It comes as regulator the Financial Conduct Authority (FCA) has been looking into thousands of allegedly dodgy deals handed out before January 28, 2021.
The free tool, shared in MSE’s latest newsletter, lets drivers draft a complaint which they can forward on.
You have to tick a number of boxes to share what your circumstances were at the time you took out the deal.
For example, you have to say whether you took out one or more finance agreements, provide your finance agreement policy number and personal details such as name, age and current address.
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Once you have filled in the boxes, it drafts up a complaint you can email to the firm that issued you a car on finance.
There’s also an option to remind you about your complaint in September, when the FCA is set to announce the findings of its investigation.
Martin Lewis previously said: “The average payback will likely be over a grand.
“The big question, if the regulator rules as expected, is whether it’ll be single or double digit billions that’ll have to be paid back to people.
“I’d urge anyone who had car finance before January 2021 to read the guide and use the free tool as soon as possible to ensure if payments happen, you don’t miss out.”
What is the Car Finance Discretionary Commission Scandal?
The Car Finance Discretionary Commission Scandal affects those who bought a car, motorbike or van on finance before January 28, 2021.
After this date, city watchdog the FCA banned lenders from using “discretionary commission arrangements” (DCAs).
This meant brokers could no longer increase interest rates on car finance loans, which in turn saw their commission bumped up.
Anyone who took out a vehicle on finance before this date could have been unfairly paying more than they should have.
The FCA has now launched an investigation to see how many people have been impacted.
MSE’s website has a useful checklist on who might be in line for money back.
It also has a list of firms who are unlikely to have handed out dodgy deals and therefore don’t owe customers money.
How do I claim?
It’s not clear at this stage whether customer complaints will be dealt with on an individual basis or on a larger scale as the FCA’s investigation is yet to conclude.
Financing firms don’t have to deal with complaints until September 25, when the FCA is scheduled to report the findings of its investigation.
But, you should start the complaint procedure now in case a future time limit is put in place.
You can either use the MSE tool, which helps you draft a complaint email.
What is the FCA investigating and who is eligible for compensation?
WHAT is being investigated?
What is being investigated?
The FCA announced in January that it would investigate allegations of “widespread misconduct” related to discretionary commission agreements (DCAs) on car loans.
When you buy a car on finance, you are effectively loaned the value of the car while you pay it off.
These loans have interest payments charged on top of them and are often organised on behalf of lenders by brokers – usually the finance arm of a dealership.
These brokers earn money in the form of commission – a percentage of the interest payments on the loan.
DCAs allowed brokers to, to a certain extent, increase the interest rate on a loan, which in turn increased the amount of commission they received.
The practice was banned by the FCA in 2021.
Who is eligible for compensation?
The FCA estimates that around 40% of car deals may have been affected before 2021.
There are two criteria you must meet to have a chance at receiving compensation.
First, you must be complaining in relation to a finance deal on a motor vehicle (including cars, vans, motorbikes and motorhomes) that was agreed before January 28 2021.
Second, you must have bought the vehicle through a mechanism like Personal Contract Purchase (PCP) or Hire Purchase (HP), which make up the majority of finance deals and mean you own the vehicle at the end of the agreement.
Drivers who leased a car through something like a Personal Contract Hire, where you give the car back at the end of the lease, are not eligible.
Or, you could complain to your car financing company direct.
In the complaint, you should ask whether you were overcharged due to your broker getting paid commission and ask the company to correct this if that is what happened.
If you’re not satisfied with the company’s response, you can take your complaint to the Financial Ombudsman Service (FOS) for free.
You don’t need to use a claims company throughout the process as these firms usually take a percentage cut of any payout you receive.
In other news, Martin Lewis issued warning to anyone who has been divorced over a simple blunder which could see your ex get your pension.
Plus, a further warning to pet owners to make a key move or risk a £500 fine.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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