New Martin Lewis car finance ‘hidden commission’ tool on MSE helps 530,000 people start claim for £1,100

Last week, Martin Lewis warned that millions of people who bought a car, van, campervan or motorbike on finance before January 28, 2021 may be owed thousands of pounds in what he said could become the “UK’s second biggest reclaim after PPI”.

The consumer champion explained to viewers of The Martin Lewis Money Show Live how to check if they have been affected and how to start the reclaim process now – even though a decision by the Financial Conduct Authority (FCA) on whether or not payouts could be due is not expected until September 25, 2024.

To make it even easier for everyone to get the ball rolling, he and his team at MoneySavingExpert.com (MSE.com) created a template letter that anyone can access and use. Incredibly, after just one week, since the template went live, Martin has revealed that it has been used by more than 530,000 people.

The financial guru shared the update in the latest edition of the MSE.com newsletter. He wrote: “Last Tuesday, we launched our brand new Car finance hidden commission reclaiming guide & tool and… wow! In just seven days you’ve sent over 530,000 complaint emails via it.

“The regulator, the Financial Conduct Authority (FCA), estimates 40 per cent of finance agreements had these dodgy commission arrangements (you won’t know if you did as it was hidden) and the average payout per arrangement may be £1,100. So that potentially equates to up to £234 million coming back to people.”

Martin added that he and the team have tweaked the tool to make it even simpler for more people to start their claim – which typically takes less than 10 minutes. You can follow the full step-by-step guide on MSE.com here.

The Martin Lewis Money Show Live is on break this week and returns to STV/ITV screens on February 20 at 8pm. You can catch up with the car finance reclaim special on the STV Player.

Car finance complaints in a nutshell

Some car finance customers may have been charged too much on their loans and the FCA is assessing the extent of the problem to make sure that, if you are owed compensation, you get it in the best way possible.

This could apply to you if:

• you used car finance to buy a motor vehicle, for example a car, van, campervan or motorbike, before 28 January 2021 (this includes hire purchase agreements, such as Personal Contract Purchases)
• your lender and broker had a discretionary commission arrangement

This does not apply if:

• you used car finance to buy a car on or after 28 January 2021
• you used a hire agreement, such as a Personal Contract Hire

FCA pauses the complaints process

The FCA is examining the issue to make sure that, if you’re owed compensation, you get it in the best way possible. In the meantime, it has paused the 8-week deadline for providers to respond to complaints about car finance involving this type of commission.

You can still complain to your provider, but they will not have to respond to your complaint until after 25 September 2024, at the earliest.

The FCA 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.”

Giving people longer to refer complaints

If you’re unhappy with a response you’ve had from your provider to this type of complaint, the FCA is giving you longer to take your complaint to the Financial Ombudsman Service.

Usually, you have to take your complaint to the Financial Ombudsman within six months of getting a final response from your provider, but this is being extended by up to 15 months if you were sent a final response between 12 July 2023 and 20 November 2024.

You can make a complaint using the free template letter tool on MSE.com here.

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