Drivers issued urgent car finance warning as Britons could receive compensation - 'Put in a complaint!'
Dr Roger Gewolb on the car finance repayment scandal
GB NEWS
Car finance customers who believe they were affected by the ongoing scandal are being urged to complain to their lenders, as MPs scrutinise the industry.
The Financial Conduct Authority (FCA) has issued guidance for dissatisfied car buyers who feel their loans were mis-sold, with thousands already filing complaints.
The issue centres on commission payments that lenders and dealers have been accused of concealing when arranging car finance deals.
The matter has gained significant attention following recent parliamentary scrutiny, with the financial regulator facing questions from the Commons Treasury Committee.
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Drivers are being urged to check if they could be impacted by the car finance scandal
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Hundreds of thousands of drivers have already lodged complaints about potential mis-selling, in what could become one of the largest financial compensation schemes since the PPI scandal.
The controversy affects both new and second-hand car purchases made through finance agreements, with the FCA now actively considering how to address the mounting concerns.
It is estimated that two million cars are sold through finance agreements every year in the UK, highlighting how large the issue could become.
These deals typically involve customers paying an initial deposit, followed by monthly payments with interest for their vehicles.
The FCA has been investigating cases where car dealers received commissions from lenders based on the interest rate charged to customers. These commission arrangements were banned in 2021.
Following a Court of Appeal ruling, the controversy has broadened the scope to include other types of "hidden" commission payments.
This development has raised the possibility of millions of motorists being eligible for compensation.
Major banks have already responded by setting aside hundreds of millions of pounds in anticipation of potential claims.
During a Commons Treasury Committee hearing, Dame Meg Hillier described the situation as "one unholy mess", noting concerns over dealer and lender transparency.
In response to questions about advice for affected customers, FCA chief executive Nikhil Rathi provided clear guidance.
He said: "If you are not satisfied with the terms of your finance agreement, you should contact your lender and put in a complaint to your lender if you are concerned."
Lenders involved have now requested the Supreme Court to examine the case. As a result, dealers and lenders have been granted additional time to process complaints.
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It is believed that hundreds of thousands of drivers have already lodged a complaint
PAThe potential scale of compensation claims could rival that of the PPI scandal, with hundreds of thousands of complaints already believed to have been filed.
The FCA is now considering implementing a "structured redress system" for affected customers. This system could take one of two forms: either requiring customers to actively submit complaints, or mandating firms to review past cases and automatically issue compensation.
A decision on the precise approach is expected next year, according to evidence presented to MPs.
The implications could extend beyond car finance, with the FCA chief confirming they are examining whether the ruling might affect other sectors.
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