Money saving expert Martin Lewis has launched a new tool to help motorists potentially save thousands of pounds if they made use of car finance in recent years.
The Financial Conduct Authority (FCA) has warned that some drivers who used car finance to get a vehicle before 2021 may have been charged too much on their loans.
Some car dealers were able to adjust the interest rates they offered customers for car finance, allowing the broker to receive more commission – known as a discretionary commission arrangement.
This practice was banned in 2021 but following a number of complaints, the FCA is assessing the problem after a number of lenders and brokers rejected claims as they believe they haven’t acted unfairly.
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Martin Lewis has urged motorists to lodge their complaints as soon as possible
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Martin Lewis has now launched a new service to help drivers deal with car finance issues and potentially save them thousands of pounds in the process.
The money saving expert has previously helped people save through bank charges and reclaiming money from PPI.
Through his work to help people save money on their bills, Martin Lewis prompted over 10 million people to download free templates and get over £10billion back.
The free car finance reclaim guide and tool will generate a bespoke letter for motorists who purchased a car, van or motorbike with a finance agreement before January 28, 2021.
He warned that many drivers could be affected and should look at getting a complaint logged “as soon as possible”.
Martin Lewis, founder of MSE, said: "A back of the envelope calculation shows this will likely end up being the second biggest ever UK reclaim campaign, after PPI.
“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."
The Money Saving Expert team has suggested that the FCA will set up a form of a “mass-scale redress scheme” to help drivers deal with their claims.
Normally, drivers would need to take their complaint to the Financial Ombudsman within six months, although this has been extended by up to 15 months if they were sent a final response between July 12, 2023, and November 20, 2024.
The changes do not apply to people who used car finance to buy a car on or after January 28, 2021, and if they used a hire agreement, such as a Personal Contract Hire.
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It has been estimated that millions of drivers could be included in the complaints process
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The FCA said: “The pause will apply to complaints about motor finance agreements where there was a discretionary commission arrangement between the lender and the broker and will last for 37 weeks (approximately nine months).”