MARTIN Lewis has warned everyone who owns a car, van or motorbike that they could be owed thousands of pounds.
The Money Saving Expert said that millions of motorists have overpaid in fees without knowing due to “hidden commission”.
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If you bought a car, van, campervan or motorbike on finance before January 28 2021, Martin says you may be affected.
Speaking on his ITV show tonight, he stressed that this is the date of your finance agreement, not the date you got your motor.
Martin revealed that around 40 per cent of these purchases had hidden Discretionary Commission Arrangements.
He added: “In my view this is likely to be the UK’s second biggest reclaim after PPI.
“Some estimate firms may be liable to repay up to £13 billion.”
Lewis‘ key point was that lenders let brokers and car dealers make up interest rates to increase commission.
Brokers could then charge more interest to receive more commission.
It meant that those purchasing vehicles did not know it was not fixed-interest rate and could be negotiated.
As many customers didn’t realise they could bring interest rates down, it resulted in millions overpaying without knowing.
The regulator, the Financial Conduct Authority (FCA), has since launched a major investigation into hidden, unfair car finance commission.
In January 2021, the regulator, the FCA banned “discretionary commission arrangements” (DCAs).
This stopped lenders allowing brokers – including car dealers – to increase interest rates on car finance, so that they’d net more commission.
And the FCA launched a huge investigation in January 24, which Martin thinks wouldn’t have happened if there wasn’t already substantial evidence.
Martin says that anyone affected should lodge a complaint immediately.
Your complaint should be made to the lender that provided the car finance.
This is the firm you actually paid each month – not the broker or car dealer.
Martin explained that the earlier you put a complaint in, the less chance you will be timed out with the deadline for complaints.
The FCA have set a deadline of September 25 where they will conclude their investigation.
And he added that there is no need to use a claims management firm to complain, because it would take a cut of any money you’re due.
It also doesn’t matter if the car’s now paid off, so the agreement is over.
The Money Saving Expert says you are still eligible to reclaim, even if the car was repossessed.
Of course, if your purchase was interest-free you cannot claim for any cash.
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.
As is expected, the bigger the financing – the more you were charged – means the more you may be due back.
Are you eligible for a claim?
This is for those who bought a motor vehicle on finance which includes cars, vans, campervans and motorbikes.
The finance agreement had to be taken out before 28 Jan 2021, and most likely after April 2007.
The sooner you log your complaint, the less likely it is you will be at risk of being timed out.
The vehicle had to be for primarily personal not business use.
Commuting comes within personal use, but using it more than occasionally for business or paying on your business will likely mean it won’t count.
Some vehicles that have been financed through a business agreement could be included, but only if they have been used for primarily non-business reasons.
You can reclaim on behalf of someone who has passed away but it is likely the lender will want to see a copy of the will.
You can claim if your purchase included Personal Contract Purchases (PCP)
Personal Contract Purchase are where you make loan-like repayments with the option to pay a larger ‘balloon’ payment at the end if you want to own the car.
If you bought using hire purchase you are eligible.
This is where you pay off the total value of the car in monthly instalments.
How to complain?
Ask whether your car finance included a discretionary commission arrangement.
If it did, lodge a time-stamped complaint
You can use this free tool on Money Saving Expert to help create a form to lodge a complaint.