Martin Lewis issues warning to millions of drivers who could be due payouts
Martin Lewis has warned millions of drivers could be owed thousands of pounds back in unfair car finance commission.
The MoneySavingExpert.com founder explained how “around 40%” of car finance deals taken out before January 28, 2021, contained so-called “discretionary commission arrangements”. This allowed car dealers to adjust the interest offered to customers, in order to increase their commission.
This practice was banned by the Financial Conduct Authority (FCA) in 2021 - but the regulator has now launched a new investigation that could lead to overpaid interest being paid back to anyone who is affected. Martin Lewis this evening said billions of pounds could be returned to millions of drivers.
The investigation will look into personal contract purchases and hire purchase, but it won’t include personal contract hire, also known as leasing. The FCA is currently scheduled to publish its findings on September 25, 2024.
Depending on the outcome of the FCA investigation, you could be owed money if you had a car, van, campervan or motorbike - but the vehicle had to be primarily for personal use, not for business use. Martin explained how figures from the FCA suggests drivers paid £1,100 more interest on a typical £10,000 four-year car finance deal when there was a discretionary commission arrangement. But the bigger your loan, the more money back you could be due, the MoneySavingExpert.com founder said.
Speaking this evening on the Martin Lewis Money Show Live on ITV, Martin said: "These finance firms let brokers and car dealers make up the interest rates, so they could charge more interest, so they got bunged more commission. They didn’t tell you that, which means you could not negotiate. You didn’t know it wasn’t a fixed interest and you could bring it down. Millions of you overpaid, crucially, without knowing.
"In this January, four weeks ago [the FCA] launched a huge investigation into what's going on. My view on this, because the regulator wont comment… I don't believe it would have launched this investigation unless it had substantial evidence and the likelihood is the investigation now is to make sure its got everything right so it cant be judicial reviewed."
Martin is now urging people to log a complaint as soon as possible, in case a timeframe is later imposed by the FCA. He advised not using a claims management firm, as you can issue a complaint yourself for free by using a new letter formatting tool on the MoneySavingExpert.com website.
Martin said: "[The FCA] has said to firms, you don't have to reply formally to peoples complaints - its extended the deadline to deal with complaints until that investigation comes out. But my view is, you should be logging a complaint now if your in the category of people that think this may have happened to you."