Martin Lewis, the founder of MoneySavingExpert, has raised concerns that the ongoing investigation by the Financial Conduct Authority (FCA) into car finance mis-selling could double in size.
The FCA recently announced an extension to the scope of its investigation, now including all car finance deals with fixed commissions, not just those with discretionary commission arrangements (DCAs) says Car Dealer Magazine. This move follows a Court of Appeal ruling that deemed it unlawful for brokers to receive commissions without customers’ informed consent.
Lewis believes this could significantly increase the number of people eligible for compensation, potentially reaching levels similar to the PPI scandal. He has urged consumers who have taken out car finance deals between 2007 and 2021 to check if they were affected and to file complaints if necessary.
The FCA has not commented on Lewis’s claims and did not mention any change in the scope of its investigation in yesterday’s announcement.
In a lengthy post, Lewis said the change could take the motor finance scandal closer to PPI levels and pose a ‘substantial threat’ to the motor finance industry.
‘Now most people who’ve had any type of it [car finance] are being urged to complain – doubling the numbers,’ he wrote, says Car Dealer Magazine.
‘While not specified in its announcement, I’ve had it confirmed this applies to ALL car finance commission complaints, not just the Discretionary Commission Arrangements (DCAs) complaints previously covered.
‘What this means: It signals that the FCA is paving the ground to in future broaden the scope of its car finance investigation, so not only at the 40% of past claims that had DCAs (where dealers could increase their commission by increasing interest) but all commissions including fixed commissions.
‘This is on the back of the Court of Appeal, which ruled “consumers need to know all material facts including the amount of commission” which they often weren’t told even in fixed commission cases.
‘It looks like (I need to dig) if the hold is extended, almost everyone who has had car finance deals may have a complaint (I need to examine timelines of what counts) and be potentially due money back (this includes those already rejected as they were told they ‘didn’t have a DCA’).
‘This potentially more than doubles the number of people involved, and would really start to look more like PPI scale of payouts (and a substantial threat to the car finance industry).’
Earlier this year, Martin Lewis’s MoneySavingExpert website launched a free car finance complaint tool, which quickly became inundated with inquiries following a special program about car finance on ITV. The tool was designed to help consumers check if they were affected by hidden discretionary commission arrangements (DCAs) and to file complaints if necessary.
It’s been a game-changer for many people, making it easier to seek potential compensation.
What are your thoughts on this development? Do you think it will lead to fairer outcomes for consumers?
