Millions of people are thought to be affected
Martin Lewis wants people to check their old paperwork or risk missing out on more than £800. He spoke about the widespread issue on his BBC podcast, warning that people won’t realise they’re entitled to compensation.
Millions are believed to be due payouts after being mis-sold car finance agreements in the past. According to the Financial Conduct Authority (FCA), those affected could receive an average of £829 each, with 12.1 million deals mis-sold.
The issue concerns loans taken out to buy a motor vehicle between April 2007 and November 2024, where companies failed to provide important information to customers. FCA officials have mandated that an “industry-wide scheme” will be set up to ensure victims receive their compensation. Lenders have been tasked with going through their records to identify those affected, but Mr Lewis urged people to take action themselves.
Mr Lewis has encouraged anyone who might have been caught up in the scandal to lodge a complaint with their finance provider. He stressed this is key, as there’s no way of knowing whether you were mis-sold without taking action. He clarified: “One of the key definitions of mis-selling is they did one of three different types of mis-selling and they didn’t declare it to you, they didn’t tell you.
“You won’t know, you can’t know if you were mis-sold, so the only way to know if you were mis-sold right now is to complain.” He outlined three further compelling reasons why you should submit your complaint.
Mr Lewis said: “Your payout will be quicker, likely in 2026, not 2027. Secondly, if you haven’t complained and the firm doesn’t have your car finance agreement and you do, you will miss out. Third, you may have moved house, you might have even moved three or four times, you might have changed name if you got married.
“On all of those things, the firm might not be able to contact you, whereas if you’ve complained, you can put in all of your details.”
Who could be entitled to compensation?
Mr Lewis clarified that there are three categories of motor vehicle loan where customers may possibly have been mis-sold the product, between April 2007 and November 2024. This could apply if you took out a PCP (Personal Contract Purchase) or a HP (Hire Purchase) loan within these dates.
These can include:
- Discretionary commission arrangement – this is where the car finance broker could increase your interest rate to increase their commission, without telling you
- Contractual ties – where you were told your application for finance would go to a panel of lenders, but it did not do this
- The level of commission was too high
