MARTIN Lewis has revealed that thousands of Brits may be due compensation if they get a car finance scandal “winner email”.
Industry insiders have blown the whistle on allegedly dodgy loan deals, telling Sun Motors: “We knew what we were doing was wrong.”
The Mega AgencyMartin lewis has revealed what it means when you get a car finance scandal ‘winner email’[/caption]
The Financial Conduct Authority (FCA) is looking into the possibility of malpractice, which it says may have affected up to 40% of finance details after 2007.
Now Martin, who has campaigned tirelessly on the issue, has explained how customers affected may soon get a “winner email”.
Speaking on the Martin Lewis Money podcast, the personal finance guru urged motorists to submit their complaints as soon as possible.
He read out a response he had received from listener Samantha Harvey, who said that she had received an email from her loan provider notifying her that her deal had been subject to the type of commission arrangement the FCA is investigating.
Martin said: “Yay absolutely right, good stuff.
“That’s what you want to hear.
“That’s the winner’s email.
“The hope is in September, the hope from consumers anyway, is that in September the regulator will say you deserve some of the discretionary commission arrangement money back.”
The FCA probe is expected to conclude in September and a compensation scheme is looking increasingly likely.
Just this month, the organisation’s chief executive Nikhil Rathi told The Times that it is “improbable” that the investigation would find nothing.
It comes after former car finance workers gave Sun Motors an inside look at the shadowy world of vehicle loans.
They claimed that “ridiculous” rip-offs were encouraged by major firms and alleged that companies had acted illegally to try and skirt the FCA’s 2021 ban on the practice to continue “filling their boots”.
What is the FCA investigating and who is eligible for compensation?
What is being investigated?
The FCA announced in January that it would investigate allegations of “widespread misconduct” related to discretionary commission agreements (DCAs) on car loans.
When you buy a car on finance, you are effectively loaned the value of the car while you pay it off.
These loans have interest payments charged on top of them and are often organised on behalf of lenders by brokers – usually the finance arm of a dealership.
These brokers earn money in the form of commission – a percentage of the interest payments on the loan.
DCAs allowed brokers to, to a certain extent, increase the interest rate on a loan, which in turn increased the amount of commission they received.
The practice was banned by the FCA in 2021.
Who is eligible for compensation?
The FCA estimates that around 40% of car deals may have been affected before 2021.
There are two criteria you must meet to have a chance at receiving compensation.
First, you must be complaining in relation to a finance deal on a motor vehicle (including cars, vans, motorbikes and motorhomes) that was agreed before January 28 2021.
Second, you must have bought the vehicle through a mechanism like Personal Contract Purchase (PCP) or Hire Purchase (HP), which make up the majority of finance deals and mean you own the vehicle at the end of the agreement.
Drivers who leased a car through something like a Personal Contract Hire, where you give the car back at the end of the lease, are not eligible.
You can check whether you might be owed money and submit a complaint using Martin Lewis’ free tool here.
One former employee of a major loan provider said: “There was a lot of pressure to get the most out of each deal as we were targeted on monthly income which should have been around £20,000 per employee per month.
“We knew full well what we were doing, and the practice was encouraged by the firm.”
Meanwhile, Martin has estimated that the total compensation pot could reach up to £490 million as the scandal becomes the “new PPI”.
The finance whizz was left “staggered” after over a million people submitted complaints through his website in a month.
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