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29th April 2024
10:28am BST
Martin Lewis has issued a warning to those who bought a vehicle prior to 2021.
The Money Saving Expert has said that 'thousands' of people could possibly entitled to thousands of pounds.
The Financial Conduct Authority (FCA) is looking into concerns that those who bought their vehicle on finance may have paid inflated prices for the loans, whether that be on new or secondhand vehicles.
It comes after over 10,000 complaints to the Financial Ombudsman Service (FOS).
Executive director of consumers and competition at the FCA, Sheldon Mills, said: "We are taking a closer look at historical discretionary commission arrangements in the motor finance market following a high number of complaints from customers, which are being rejected by firms."
"If we find widespread misconduct, we will act to make sure people are compensated in an orderly, consistent and efficient way," he added.
The law was changed in January 2021 to make sure that firms could no longer earn commission from the interest levels on customer's loans.
Lewis compared the situation to the PPE scandal, which led to a £40 billion payout. He believes that the FCA would not have opened an investigation into car financing if they were unlikely to find anyone at fault.
"HUGE announcement from @theFCA this morning that has gone totally under the radar. It may mean a payout for millions who bought a car/van on motor finance before 2021," he wrote in a post earlier this year on X, formerly Twitter.
However, the financial expert added that people should get their complaints in as soon as possible.
"Clearly this means getting complaints in, if you were mis-sold, is going to be crucial," he said.
"It should be noted, part of the announcement is the FCA has put a freeze on firms handling complaints for now, so if you complain now they don’t have to do anything, but my provisional thoughts are it is worth it for people who think they’ve been mis-sold getting in a complaint now as a marker.”
"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," he said.
"In this January, four weeks ago [the FCA] launched a huge investigation into what's going on.
"My view on this, because the regulator won't 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 can't be judicial reviewed."
Lewis continued: "[The FCA] has said to firms, you don't have to reply formally to peoples complaints - it's extended the deadline to deal with complaints until that investigation comes out.
"But my view is, you should be logging a complaint now if you're in the category of people that think this may have happened to you."
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