Martin Lewis launches car finance money saving tool

Whether you’re considering a car loan, lease, or other financing arrangements, Martin Lewis’ tool aims to help you make informed decisions and potentially save money in the process.

How to find out if you have been impacted by the scandal?

If you purchased a car, van, or motorbike on PCP or Hire Purchase (not leasing) before January 28, 2021, you may be eligible for a refund due to the hidden discretionary commission scandal.

Here’s how to check if you were impacted:

1. Use this Tool: A free car finance reclaim tool that can help you determine if you’re owed money. This tool allows you to check whether your car finance deal had hidden “discretionary commission arrangements” (DCAs) that led to overpayment without your knowledge. Visit this reclaim guide to access the tool and follow the step-by-step process.
2. Background: In about 40% of car finance deals, lenders allowed brokers and car dealers to increase interest rates to boost their commission, leaving consumers overpaying unknowingly. The Financial Conduct Authority (FCA) banned DCAs in January 2021, but the impact of past practices remains. The FCA is currently investigating this issue and may set up a mass-scale redress scheme by September 2024.
3. Act Now: Although firms are currently not required to handle complaints due to a pause, it’s essential to log your complaint early to avoid timing out. Assume that a redress scheme is coming, and use our guide to navigate the complaint process.

Will you be blacklisted for complaining?

Complaining about the hidden discretionary commission scandal will not result in blacklisting. In fact, it is your right as a consumer to raise concerns and seek redress if you believe you were affected by unfair practices.

The FCA encourages consumers to voice their complaints and seek compensation where applicable. So, rest assured that expressing your concerns will not lead to blacklisting.

What firms does this involve?

The hidden discretionary commission scandal in the UK car finance industry involves practices that were prevalent before January 2021.

Here’s what you need to know:

1. Lenders and Brokers: The scandal centers around lenders allowing brokers, including car dealers and other car finance firms, to adjust the interest rates charged to customers on car finance loans. These loans include Personal Contract Purchase (PCP) and Hire Purchase Agreements.
2. Overcharged Interest: In about 40% of car finance deals, hidden DCAs were used. These arrangements allowed brokers and dealers to increase interest rates, resulting in consumers unknowingly overpaying. Many buyers assumed the price was fixed and didn’t negotiate, says Money Saving Expert.
3. FCA Investigation: The FCA launched a major investigation into this issue in January 2024. The FCA aims to hold firms accountable and potentially set up a mass-scale redress scheme by September 2024. According to Money to the Masses, cases involving DCAs have already been referred to the Ombudsman, and some decisions have been published.
4. Firms Involved: While specific firms have not been explicitly named in the provided information, several motor finance providers have been associated with discretionary commission arrangements. These include Advantage Finance, First Response Finance, Oodle, Moneybarn, Specialist Motor Finance, Billing Finance, and Lombard Mallard. However, it’s essential to check your individual car finance deal to determine if you were impacted, says Car Dealer Magazine.

Remember, if you purchased a car on PCP or Hire Purchase before January 28, 2021, you may be eligible for a refund. Use the free car finance reclaim tool to assess your situation and seek redress if applicable.

How to find out who to complain to

If you suspect you’ve been affected by the hidden discretionary commission scandal related to car finance, here’s how to proceed:

1. Martin Lewis’ Car Finance Commission Reclaim Guide: Most people should start with Martin Lewis’ car finance commission reclaim guide and tool. This resource is specifically designed for those who are not directly caught by the hidden commission mis-selling investigation but want to complain about other issues related to car finance. It provides step-by-step guidance on how to proceed.
2. Check If You Were Impacted: Use the free car finance reclaim tool to determine if you’re owed money. This tool helps you assess whether your car finance deal had hidden DCAs that led to overpayment without your knowledge. If you bought a car, van, or motorbike on PCP or Hire Purchase (not leasing) before January 28, 2021, you could be eligible for a refund.
3. Understand Car Finance Types: Familiarize yourself with the different types of car finance:
   • Personal Contract Purchase (PCP): Similar to a loan, but you won’t pay off the full value of the car, and you won’t own it at the end unless you choose a larger final payment (balloon payment).
   • Hire Purchase: Pay off the car’s value in monthly installments, with the vehicle secured against the loan.
   • Leasing (Personal Contract Hire): Rent a car for a set period without the chance to own it.
4. Complain to Your Provider: If you believe you were mis-sold car finance, complain directly to your finance provider. Explain the issues you faced, such as affordability checks not being carried out or unclear agreement details. Seek compensation if applicable.
   • Financial Ombudsman: If you’re unhappy with the outcome, escalate your complaint to the Financial Ombudsman. It’s free and straightforward to complain to both your provider and the Ombudsman. You can also seek guidance from MoneyHelper.

Don’t hesitate to take action if you believe you’ve been treated unfairly in your car finance agreement. Expressing your concerns and seeking redress is your right as a consumer.

How much will I be repaid if I was overcharged?

If you were overcharged due to a hidden DCA in your car finance deal, the amount you’ll be repaid depends on various factors.

Here’s what you need to know:

1. Investigation and Redress: The FCA has been investigating hidden, unfair car finance commission practices. While the investigation is ongoing, it’s likely that the FCA will set up a mass-scale redress scheme by September 2024. This scheme aims to provide compensation to affected consumers.
2. Unique Tool: To determine the specific amount you may be owed, use the free car finance reclaim tool provided by Martin Lewis. This tool helps you check whether your car finance deal had hidden DCAs that led to overpayment without your knowledge. If you bought a car, van, or motorbike on PCP or Hire Purchase (not leasing) before January 28, 2021, you could be eligible for a refund.
3. Individual Cases: The actual repayment amount will vary based on your specific car finance agreement. Some cases have resulted in substantial refunds, while others may be smaller.
4. Act Now: Even though there’s currently a pause on firms handling complaints, it’s essential to log your complaint early to avoid timing out. Assume that the redress scheme is coming, and follow the complaint route outlined in the guide. Seek professional advice if needed, and remember that this process does not constitute legal advice, says Money Saving Expert.

Overall, the exact repayment amount will depend on your individual circumstances, but using the reclaim tool is a crucial step toward seeking what you’re rightfully owed.

What’s likely to happen next?

Although there’s currently a pause on firms handling complaints, it’s crucial to log your complaint early to avoid timing out. Assume that a redress scheme is coming, and use the guide to navigate the complaint process.

The FCA’s investigation is ongoing, and a mass-scale redress scheme may be set up by September 2024 and until then, there’s not much that can be done.