UK car finance scandal: Key dates and guide to claiming £1,000s in overcharges
If you entered into a car finance agreement within a specific timeframe, you might be entitled to a substantial refund.
Every day, My Claim Group, an organisation assisting individuals who were unjustly overcharged for car finance over a 14-year span, is being contacted by tens of thousands of people who believe they are owed cahs.
Depending on the outcome of a significant court case, tens of billions of pounds could potentially be reimbursed to UK drivers in the forthcoming months.
Those who initiated a car finance agreement between 2007 and 2021 may have been wronged without even realising it. As the court case related to this scandal approaches its conclusion, we've compiled a comprehensive guide to help you understand the situation.
(Image: Maksym Belchenko via Getty Images)
What are we waiting for?
On April 1 (no joke), the Supreme Court commenced its hearing to determine whether the Court of Appeal's ruling should stand. The Court of Appeal's decision, which deemed all car finance agreements with hidden commissions as unlawful, took many by surprise.
This ruling implies that a larger number of people will be eligible for refunds from lenders. Currently, we're awaiting the Supreme Court's decision on whether to overturn this ruling.
Car finance companies Close Brothers and Motonovo appealed to the UK's highest court following the Court of Appeal's verdict in October of the previous year.
When can we expect the judgement?
Supreme Court rulings typically take anywhere from a few weeks to several months. Given the importance of this case, it will likely be fast-tracked, although the exact timing of the ruling remains uncertain.
What would be the implications if the Supreme Court reverses the decision?
Although the number of individuals entitled to compensation would decrease, a significant number would still be due money. This is because two types of car finance mis-selling are currently under scrutiny: Discretionary Commission Arrangements (DCAs) and Commission Disclosure complaints.
So, what exactly is a DCA?
Approximately 40% of car finance agreements from 2007 to 2021 fall under DCAs. Brokers and dealers often inflated the interest customers had to pay on their car finance, typically without informing them, on Personal Contract Purchase (PCP) and Hire Purchase agreements.
This was done to boost their commission.
And what constitutes a Commission Disclosure complaint?
This is the primary focus of the ongoing Supreme Court hearing and stems from the Court of Appeal's ruling that car finance agreements failing to disclose all details of commission were unlawful. This includes the amount brokers would receive as commission, which was seldom revealed.
Money Saving Expert estimates that this applies to 99% of car finance cases, including DCA cases. If upheld, this could imply that 99% of all individuals who entered into car finance deals between 2007 and 2021 might be owed money.
So, what's the next step?
Once the Supreme Court delivers its verdict, the Financial Conduct Authority has pledged to outline the subsequent steps within a matter of weeks. If the Court of Appeal's judgement is reversed, approximately 40% of individuals who entered car finance agreements during the relevant period will be eligible for refunds.
The total sum could potentially reach around £10 billion. However, if the ruling is upheld, the number of claimants could significantly increase, and the compensation pot could well surge into tens of billions of pounds.
Is it advisable to lodge a complaint at this stage?
Absolutely. While the Supreme Court Case's outcome might necessitate lenders to proactively reach out to potential refund recipients, submitting a claim ensures you're less likely to be overlooked for any reason.
This is especially crucial if you have relocated since purchasing a vehicle on finance, plan to move soon, or have had any changes to your contact information.
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