Martin Lewis gives urgent warning to drivers over slice of £18b compensation
Martin Lewis has weighed in on the Financial Conduct Authority's (FCA) recent announcement about its official redress scheme for drivers who were mis-sold car loans, potentially opening the door to compensation claims.
The move comes after a Supreme Court ruling that partially overturned previous decisions regarding hidden car finance commission claims, setting the stage for drivers to claim a share of an estimated £18 billion in compensation, with many individuals likely to receive £950 or less.
In response to the news, Martin took to social media, advising: "Should you put a car finance complaint in now on the back of the regulator's new consultation? (No need to do anything if you've already complained)." In other similar news, Nationwide will pay £760 into accounts of customers who do one thing.
Echoing the FCA's guidance, he continued: "Our advice remains that consumers concerned that they were not told about commission and who think they may have paid too much for the finance, should complain now."
He also highlighted the potential savings for consumers by avoiding third-party services, stating: "We aim to make any scheme easy to participate in, without needing to use a claims management company (CMC) or law firm. Using a CMC or law firm may end up costing them up to 30% in fees of any compensation they receive."
He continued: "My view on the back of this is there's no harm in putting a DIY complaint now to see if you had a Discretionary Commission Arrangement and it could be particularly beneficial in old cases where you have the detail of your car finance, but the car finance firm may have deleted it, as that way you put a marker in that you want your case looked at."
"Though in newer cases, it's more that many want to know now whether you're likely due compensation or not, but if you don't want to hassle, you likely wouldn't lose out by not putting one in."
The money guru broke down the two different types of car finance miss-selling for those caught up in the chaos, starting with discretionary commission arrangements, reports Birmingham Live.
Martin explained: "That was banned in 2021. What could have happened last year, the regulator announced it would be investigating that and it is very likely people were miss-sold on that basis, is what we're thinking right now. What we were waiting for in the Supreme Court decision was if it said anything that stopped Discretionary Commission Arrangements being done, or a redress scheme being done by the regulator."
He added: "There wasn't anything as far as I can see right now. So I suspect within the next 6 weeks, it will launch a consultation for a redress scheme. Which is why I have a very big warning: DO NOT sign up to a claims firm now if you're thinking of it, because it is absolutely plausible that you will get the redress without doing anything but the redress firm will want 25 or 30% of the money, even though it hasn't done anything. So sit on your hands right now, we're waiting to see what happens with the regulator."
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