Money saving expert Martin Lewis has warned drivers the deadline to put in a claim for the car finance scandal is “looming” with motorists only having a few months left to complain.
The car finance issue saw drivers overpay on interest rates when purchasing a vehicle between 2007 and 2021.
Drivers overpaid through the discretionary commission arrangement, which was rarely publicised to consumers, meaning they were paying more than necessary.
Under DCA schemes, drivers were charged more each month for car repayments which went straight to brokers and car dealers who received the money as commission.
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More than 1.2 million drivers have complained about the DCA issue
PAMore than 1.2 million complaints were flagged by drivers to Lewis and his Money Saving Expert website thanks to its car finance tool which could show whether they had been overcharged during the period.
The site has averaged roughly 30,000 complaints per day from angry drivers who are demanding compensation for the money they may have lost when paying larger rates of interest.
Now with the return of The Martin Lewis Money Show Live, he urged drivers who haven’t applied for compensation to do so before the consultation deadline in September.
The Financial Conduct Authority, the regulator for the industry, said that providers will not have to respond to a complaint until after September 25 at the earliest, which is when they could issue compensations.
Until this point, the regulator explained that drivers who are affected by the scandal should send in their complaints now, so when the deadline hits, they are able to get their money back quickly.
Already, Lloyds, which owns Black Horse, a car loan company, has put a £450milion “provision” towards potential costs and payouts ahead of the September deadline.
Lewis said on his show: “The most important message I can give anyone watching is if you bought a car on PCP or hire purchase before January 2021 and you haven't put a claim in now to find out if you have discretionary commission, the sooner you get it in, the less chance there is of you being timed out.
“There are free tools online, you don't need to pay anybody to do it, so go and have a look at that if that's ringing a bell.”
The regulator added that it banned the DCA practice in 2021. But there have since been a high number of complaints from customers about how much they were charged before the ban.
However, providers (lenders and brokers) are “rejecting” most of the complaints, because they believe they haven’t acted unfairly and haven’t caused customers to lose out, the FCA explained.
The regulator said: “It’s important that any complaints are dealt with by providers in a consistent, efficient and orderly way. Given the high number of possible complaints, there’s a risk this might not happen.
“Managing this risk is important because this borrowing isn’t covered by the Financial Services Compensation Scheme. This means if complaints aren't dealt with in an orderly way and your provider goes out of business, you may not get the money you’re owed.”
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DCA practice has been banned by the FCA since 2021
PAThe CEO of the FCA noted that it's “improbable” that its investigation into the car finance problem will find “no evidence of wrongdoing”, but this won’t be confirmed until it reports in September.
