Drivers are collectively likely to be owed billions after Martin Lewis' car warning leads to 262,500 drivers coming forward already.
The nation's trusted Money Saving Expert is back to give us an important warning for anyone who bought a car or a van before 2021.
While Lewis continues to help us navigate through the ongoing cost-of-living crisis, this time he's here to warn us of the news that could affect millions of UK motorists.
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The 51-year-old recently explained why drivers who purchased their car or van between 2007 and 2021 could be owed 'billions' in compensation.
This applies to anyone who bought a car, van or motorbike with a Personal Contract Purchase (PCP) or finance.
Now, a 'historic' Financial Conduct Authority (FCA) investigation has been launched amid concerns that those who bought their vehicle on motor finance may have been unfairly charged inflated prices for loans on new and secondhand vehicles.
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Analysts at Jefferies calculated that the total costs for the industry could reach around £13 billion, according to the Financial Times.
Speaking to the BBC, Lewis explained: “What was happening at that point is the lenders who organised the finance were saying to the car dealers 'the commission is discretionary'.
“In other words, if you want more commission on these finance products - which is why they were being more heavily sold - you can simply increase the cost of the finance and you will get more commission.
“Many of them did so and it wasn't declared, so the consumer was not aware quite what enormous sums were being paid in commission to car dealers for this type of finance.”
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He went on to say that the FCA wouldn’t launch such an investigation if it was unlikely to find any wrongdoing, adding: "Clearly this means getting complaints in, if you were mis-sold, is going to be crucial.
"It should be noted, part of the announcement is the FCA has put a freeze on firms handling complaints for now, so if you complain now they don’t have to do anything, but my provisional thoughts are it is worth it for people who think they’ve been mis-sold getting in a complaint now as a marker.”
Sheldon Mills, executive director of consumers and competition at the FCA, also said: “We are taking a closer look at historical discretionary commission arrangements in the motor finance market following a high number of complaints from customers, which are being rejected by firms.
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“If we find widespread misconduct, we will act to make sure people are compensated in an orderly, consistent and efficient way.”
TheMoneySavingExpert.com has since provided a free complaint tool and free template letter, as well as a checklist to see if you qualify for any cashback.
In an update posted on X (Twitter) today (8 February), Lewis says that 262,500 complaints have been sent after just one day of his free complaint tool being live.
"262,500 complaint emails have been sent," he tweeted. "It's estimated 40% will've had hidden commission.
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"Typical overcharge was £1,100 per agreement
"So predicted payout'll be £115,000,000 (that's conversative as many letters are multi-agreement)."
If you want to see if you are owed any money, you can access the complaint tool here.
Topics: Money, Martin Lewis, Cars, UK News
Anish Vij