Martin Lewis has urged drivers to check if they’re one of the “millions” across the UK eligible for a pay-out.
MoneySavingExpert.com (MSE), which was founded by Mr Lewis, warned that those with a car or van finance (eg, PCP) before 2021 may be due thousands.
The regulator the Financial Conduct Authority has launched a huge investigation into high commissions in motor finance.
Those who bought a car or van on motor finance from the likes of Barclays Partner Finance, Blackhorse and Santander, and think they were overcharged could be due a payout after the investigation.
The money saving expert believes there’s a chance this could be as big as PPI when it’s done.
The new investigation comes on the alleged mis-selling of new and secondhand cars and will examine whether consumers had been unfairly charged inflated prices because their dealer stood to earn a hefty commission by charging more.
The FOS has also recently ruled in favour of two consumers on the issue, prompting the Financial Conduct Authority’s (FCA’s) probe.
Mr Lewis previously explained that at the top end this could be PPI-type scale (that was £40 billion), big enough to be a form of quantitative easing (so real consequences for the next Government as it’ll likely take a year).
He said: “My suspicion is when it finishes its investigation it will (in order of likelihood) set up either:
- a) A redress scheme where it orders all the firms to pay redress to every effected customer even if they’ve not complained.
- b) Redress rules where it orders them to pay out redress based on a set formula, to those that complain.
“The pay out would be either the interest on loans (which is big), the commission (which is big), or the whole loan (which is huge). We’re possibly talking thousands back for many.
“Clearly this means getting complaints in, if you were mis-sold, is going to be crucial – especially if they choose scheme ‘b)’ and there is a cut-off involved.
However it should be noted that part of the announcement is the FCA has put a freeze on firms handling complaints for now, so if someone complains now they don’t have to do anything, but his provisional thoughts are it is worth people who think they’ve been mis-sold getting in a complaint now as a marker.
The FCA is using powers under the Financial Services and Markets Act 2000, to review historical motor finance commission arrangements and sales across several firms.
“If we find there has been widespread misconduct and that consumers have lost out, we will identify how best to make sure people who are owed compensation receive an appropriate settlement in an orderly, consistent and efficient way,” the regulator said.
