Car finance: Martin Lewis urges millions of drivers who may be owed compensation to act
Money expert Martin Lewis has urged motorists to take action if they believe they may be eligible for payouts after millions in car finance were found to have been mis-sold.
Earlier this year the Financial Conduct Authority (FCA) said car finance companies were breaching regulations by failing to properly inform customers about the commissions lenders pay to car dealers.
Anyone who purchased a car via a hire purchase or personal contract purchase agreement between April 2007 and November 2024 will now be eligible to receive payments under a new compensation scheme.
The average compensation is estimated to be £700 per settlement, potentially leading to an £8.2bn bill for lenders. Nearly four million car finance deals have already resulted in complaints, leaving around ten million more likely to be raised.
Mr Lewis is now available via the site Money Saving Expert (MSE) launched a new vehicle For those who think they may be affected. This, he explains, will allow them to “make a DIY complaint” and will make it “faster and easier” to get compensation if owed.
Mr Lewis explains: “If you haven’t made a complaint yet, it’s usually best to make a DIY complaint now, although there’s no need to do so.
“Under the proposed compensation scheme, firms will have to try to identify and contact all people who have been mis-sold, even if they have not made a complaint, and ask if they want to PARTICIPATE. There is still a risk that those with older agreements, moving house or getting married/changing names may miss out on this opportunity.”
The money expert said it was therefore “safer” to complain now, adding that the FCA boss agreed in a meeting with him. Those who do this using the MSE tool will find the process happens automatically for them, meaning payments up to eight months early, he explains.
“Because once you’ve lodged a complaint, if you’ve been missold, they need to contact you to tell you it’s being processed and give you the right to OPEN OUT (so if you’re happy you don’t need to do anything further, but maybe you can give them details of where you’d like to be paid),” he adds.
Motorists have been warned by the FCA to be wary of fraudsters trying to take advantage of the situation, such as fraudsters pretending to be linked to the authorities or a car finance lender.
“These scammers ask individuals for personal information, including their name, address, date of birth and bank information. They then falsely claim that they owe these individuals compensation,” the statement said.
