CARN'T MISS OUT
Martin Lewis shares next steps in car finance scandal with millions of claims already in – are you owed £1,000s?
Read on to see if you might be eligible
MARTIN Lewis has issued a major update on the brewing car finance scandal, sharing next steps with over a million claims already in.
The financial services watchdog, the Financial Conduct Authority (FCA), is looking into thousands of allegedly dodgy deals spanning more than a decade.
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Customers could be due thousands of pounds in compensation, with Martin estimating a pot of around £490 million.
He was left "staggered" when more than a million Brits submitted complaints through his website in just over a month.
Indeed, the Sun Online exclusively exposed how loan providers were incentivised to offer "ridiculous" rip-off interest rates as firms sought to "fill their boots" with Brits' cash.
Now, the personal finance guru has shared the next steps for those who believe they may have fallen victim to mis-selling by loan brokers.
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Writing on the Money Saving Expert website, he said: "To announce such a public wide-scale investigation, [the FCA] will already have substantial evidence.
"I think it likely that, when the investigation completes,... the FCA will set up some type of mass-scale redress scheme - though there's a small chance it'll change its mind and say this is a damp squib.
"The best way to act is to assume that scheme is coming."
Martin aimed his advice both at motorists who have already submitted claims and those who are yet to do so.
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Anyone who believes they may have been mis-sold a loan should "act now" and submit a complaint.
While the FCA has removed the requirement for firms to respond to the claims before its investigation is concluded, Martin emphasised that it is still worth getting your in before then.
Martin Lewis warns EVERYONE who owns a van, car or motorbike they could be owed £1,000s
You can submit a complaint directly to your loan provider - once that's done just sit back and wait for the FCA report.
And time could be running out as, while the regulator has not set a deadline for complaints, it has only extended the deadlines so far.
If you receive a final response to your complaint before November 20 2024, you can now appeal to the Financial Ombudsman within 15 months, putting the cut-off at February 2026.
For those who receive a response after that date, though, the appeal window will reduce to the previous standard of six months, meaning you would have to challenge it by May 2025.
However, if you've already submitted your claim, there are still things you can do.
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.
Martin wrote: "While you gave the car finance provider 28 days, many are taking longer.
"This is because they've been overwhelmed by the number of people making enquiries.
"The important thing is that you've got your claim in and it's acknowledged - it's been time-stamped and if there is a time-bar, you've minimised the risk of being timed out."
Check to see if your provider has issued a receipt of acknowledgement, usually in the form of an email.
This will record the time that your complaint was received, upon which all subsequent deadlines are based.
If you haven't received one then make sure to check your spam folder and follow up with the firm after a few weeks if you still hear nothing.
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As for those who submitted their claim before November 2023, and so can receive a response before the FCA report, Martin has previously set out the four potential steps to take from then.
However, he warned of "fob-off" tactics and reminded drivers that the deadline to appeal to the Financial Ombudsman has been extended.