Money expert Martin Lewis has urged motorists to take action if they believe they may be eligible for a payout after millions were found to have been mis-sold car finance.
Earlier this year, the Financial Conduct Authority (FCA) said that motor finance firms had breached regulations by failing to properly inform customers about commission paid by lenders to car dealers.
Anyone who bought a car via a hire purchase or personal contract purchase agreement between April 2007 and November 2024 could now be eligible for a payout under a new redress scheme.
The average compensation is estimated to be £700 per agreement, potentially leading to an £8.2bn bill for lenders. Approximately four million car finance deals have already resulted in complaints, leaving around ten million more which could still be raised.
Through his Money Saving Expert (MSE) site, Mr Lewis has now launched a new tool for those who think they may be affected. This will allow them to put in a “DIY complaint,” he explains, making it “quicker and easier” to get compensation if owed.
Mr Lewis explains: “If you’ve not complained yet, while you needn’t do owt, it's generally best to put in a DIY complaint now.
“While under the proposed redress scheme, firms will have to try to identify and contact all the people who were mis-sold, even if they don’t complain, and ask if they want to OPT IN. There is still a risk those who had older agreements, have moved house, or got married / changed name may miss out.”
The money expert says that it’s “safer” for this reason to put in a complaint now, adding that the FCA boss agreed with him in a conversation. Those who do this using the MSE tool will see the process happens automatically for them, meaning payment of up to eight months earlier, he explains.
“That’s because once you've complained, if you were mis-sold, they must contact you to say it's being processed and give you a right to OPT OUT (so you needn't do anything more if you're happy – barring maybe give them the details of where you want to be paid),” he adds.
Drivers have been warned by the FCA to watch out for scammers that are seeking to take advantage of the issue, with fraudsters pretending to be linked to the authority or a car finance lender.
“These fraudsters are asking individuals for personal information including their name, address, date of birth and bank details. They then falsely claim that these people are owed compensation,” it said.
