Martin Lewis has alerted anyone who has bought a car on finance before a certain date that they could be due to receive more than £1,000. If you bought a car, van or motorbike before January 28, 2021, you could be due hundreds of pounds in overpaid interest.
The warning from the Money Saving Expert comes after the Financial Conduct Authority (FCA) has launched an investigation into car finance commission. In a recent post on the Money Saving Expert website, the team said this could lead to billions of pounds over overcharged interest being paid back to millions of people.
They explain that in January 2021, the FCA banned ‘discretionary commission arrangements’ (DCAs), to avoid unfairness for consumers, as brokers would increased rates on car finance to make more commission. And following the FCA’s investigation, which is due to conclude in September, Martin Lewis thinks it’s likely that a huge scheme will be set up to pay millions of people back what they are owed.
But the article recommends that you act now if you think you’ve been affected – don’t wait until September. You can’t be blacklisted from complaining, so it’s worth getting your complaint in now.
As more people become aware of the issue, it’s going to be more likely you could be timed out.
Have you been affected by a discretionary commission arrangement?
The Money Saving Expert team have put together a checklist to see if you’ve been affected by a DCA:
- Have you bought a motor vehicle on finance? This includes cars, vans, campervans and motorbikes (caravans without a motor aren’t included).
The finance agreement had to be taken out before 28 Jan 2021 (and most likely after April 2007). This could apply to those who still have an agreement in place, those whose agreement ended within the last six years, and also those complaining within three years of learning of the issue.
The vehicle had to be for primarily personal not business use. Commuting to work counts as ‘personal’ use.
You can reclaim on behalf of someone who has passed away.
It includes Personal Contract Purchases and hire purchase.
You can still claim if the car has now been paid off.
You can claim even if you’ve already claimed for diesel emissions.
It does not include interest-free finance.
If you bought a motor vehicle on finance before January 2021, you may be entitled to thousands of pounds in overpaid interest
The Money Saving Expert article says this issue involves hundreds of firms, ranging from Barclays Partner Finance to Santander Consumer Finance and BMW Financial Services.
And helpfully, the Money Saving Expert team have built a tool you can use to build an email, drafted by Martin that you can then send off. You’ll need to include details of who provided your motor finance and your policy number.
How much will be repaid?
The Financial Ombudsman Service has received more than 8,000 complaints already. The Money Saving Experts say the FOS has sided with motorists in two key cases, one against Black Horse and the other against Barclays Partner Finance.
They said that in both cases, the consumer was repaid the difference between the interest rate charged and the lowest available rate at the time. Martin explained: “A Blackhorse borrower bought a £7,619 car with a 100% loan and paid 5.5% interest (£2,096 over five years), when the cheapest rate available was 2.49%. The Ombudsman ordered Blackhorse to repay the £1,147 difference in commission, plus interest.”
The FCA’s own stats suggest that, on average, car buyers paid £1,100 more interest on a typical £10,000 four-year car finance deal when there was a discretionary commission arrangement. So, obviously, the bigger the financing, the more you were charged, the more you may be due back.
For more information, visit the Money Saving Expert article here.
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