Millions of UK drivers could be given compensation after the finance sector watchdog launched their latest investigation. Read on to find out what you need to know about car finance mis-selling.
The Financial Conduct Authority (FCA) says that some customers ‘may have been charged too much’ on car finance loans before January 2021 and is using powers under the Financial Services and Markets Act 2000 to review historical motor finance commission arrangements and sales across several firms.
Consumer champions Which? have compiled some key facts.
Does it affect me?
The FCA says you may be affected by the issue if you bought a car under a finance scheme such as hire purchase or personal contract purchase (PCP) before January 28th 2021 and there was a discretionary commission arrangement between your lender and broker.
You might not already know if your broker and lender had a discretionary commission agreement, but they should be able to tell you if you contact them. The investigation won’t apply to you if you used car finance on or after the above date or if you used a hire agreement such as Personal Contract Hire.
How do I complain?
First, contact the firm that sold your car finance product. Wait for their final response and, if you’re not satisfied, escalate your complaint to the Financial Ombudsman Service (FOS) after it replies.
A final response from the business may take a while, though. The FCA has put a pause on the eight-week deadline for providers to get back to you while it carries out its investigation. This means that providers won’t have to respond to your complaint about this sort of car finance arrangement until after September 25th 2024 at the earliest.
However, you will get longer to refer your complaint to the FOS. Typically, you’d have six months to take your complaint to the FOS after getting your final response, but the FCA has extended this referral window to 15 months for these types of car finance complaints while it carries out its work. This temporary rule applies to final responses received between July 12th 2023 and November 20th 2024.
If your complaint is covered by these temporary rules, the business must tell you. Make sure you keep a record of any complaints you make, as this could be helpful in the future.
How much compensation could I receive?
It has been estimated that redress could cost the industry between £6 billion and £16 billion.
The FCA says that if it does find ‘widespread misconduct’ and consumers have lost out as a result, it will work out how to compensate people ‘in an orderly, consistent and efficient way’.