MILLIONS of car finance customers have been given a new warning from the City watchdog over compensation claims.
A total of £7.5billion is due to be paid out to over 12million victims of the car finance commission scandal.
Drivers who took out car finance agreements between 2007 and 2024 may have been overcharged due to “discretionary commission arrangements” – where dealers hiked interest rates to pocket more money.
Now, anyone who may be owed compensation is being warned by the Financial Conduct Authority (FCA) that they don’t need to use a claims management firm to make a complaint – or could end up out of pocket.
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Using a CMC or law firm to make a car finance claim could see you hit with fees of up to 30% of any compensation you receive.
Instead, drivers should use a free template complaint letter found on the FCA’s website.
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Sheree Howard, executive director at the FCA, said: “Many people who may be owed compensation aren’t sure where to start or don’t realise they don’t have to pay someone to make a complaint.
“Our free tools are there to help people feel claim confident – so they can get any money owed back without it costing them a penny.”
The regulator has launched a £2million advertising campaign to help people concerned about their car finance feel confident about formally complaining.
The campaign is running across TV, radio, print, billboards and social media from today until September 6, directing people to the free template complaint letter.
The FCA found that 27% of car finance customers lack confidence to make a complaint without using a claims management company (CMC) or law firm, despite free tools from the regulator being available.
The survey of 1,000 motor finance customers also indicated that many car finance customers are already acting, with 59% having made or considering a claim, but a significant group (23%) said they are unsure of their options.
In June, the FCA had 170 misleading car finance claims adverts removed or amended by CMCs, bringing the total up to 1,200 since January 2024.
A redress scheme for car finance victims was finally launched in March but it has been partially suspended due to legal challenges by lenders. The FCA said it plans to defend it robustly.
The FCA has more information for car finance customers on its website at fca.org.uk/consumers/car-finance-complaints.
