A major mis-selling investigation has been launched, raising the possibility of payouts for millions who purchased cars or vans on motor finance before 2021.
Car finance mis-selling claims have become a focal point of concern, prompting the Financial Conduct Authority (FCA) to initiate a comprehensive review of complaint handling procedures.
The mis-selling investigation was triggered by concerns that motor finance firms might be unjustly rejecting claims from borrowers who believed their contracts were more expensive due to hefty commissions charged by dealers. Although such practices were banned in 2021, the Financial Ombudsman Service (FOS) received over 10,000 complaints alleging overcharging. Recent rulings in favour of consumers by the FOS prompted the FCA to delve into the matter.
This development could lead to a payout on a scale similar to the PPI (Payment Protection Insurance) scandal. Anyone who may be affected should lodge complaints promptly, to claim potential compensation for those who bought cars or vans on motor finance before 2021.
The FCA’s investigation will focus on complaints where:
- The car was purchased using car finance before 28th January 2021.
- The car finance was a personal contract purchase (PCP) or a hire purchase agreement.
- The lender and car dealer had a ‘discretionary commission arrangement’ in place, linking interest rates to broker commissions.
On the other hand, the FCA’s investigation will not cover complaints where the following has occurred:
- The car was purchased using car finance on or after 28th January 2021.
- The agreement is a car leasing arrangement (Personal Contract Hire).
- The mis-selling claim does not centre on commission but relates to other concerns like affordability checks.
The exact amount of potential payouts remains uncertain, with the FCA emphasising an orderly and efficient settlement process. Money Saving Expert, Martin Lewis speculated that payouts could include interest on loans, commission amounts, or even the entire loan, potentially reaching thousands of pounds for many claimants.
As the investigation unfolds, filing complaints promptly is crucial, especially if the FCA establishes a cut-off date for claims. The best way to file a complaint is by preparing evidence supporting your claim, including proof of purchase or lease, documents related to repairs or maintenance, and any evidence of increased costs due to environmentally friendly advertising. Stay informed about the progress of the investigation and any guidance provided by the FCA.
The car finance mis-selling claims investigation opens a window of opportunity for affected individuals to seek compensation for potential overcharging. By understanding eligibility criteria, exclusions, and the steps involved in making a claim, consumers can navigate this process effectively.
As the FCA’s review progresses, staying vigilant and following updates will be essential to maximise the chances of receiving fair compensation. If you need more information about whether you can claim from the mis-selling scandal, please don’t hesitate to contact Johnson Law Group for assistance.