Martin Lewis issues 'dangerous' warning to drivers who have car on finance

Martin Lewis has issued an update over whether car finance is "dangerous" in the wake of the Financial Conduct Authority investigation into mis-sold commission. The BBC and ITV star explained his latest thoughts via Twitter, now X.

The Money Saving Expert founder wrote today: "Car finance & potential commission reclaims: is it fair, is it dangerous? Until the last couple of weeks we were only talking about possible refunds where people had hidden Discretionary Commission Arrangements (DCAs), which meant dealers could up interest to get paid more commission without consumers knowing.

"In this area, you can see the argument of lack of transparency and restriction of consumer choice." Mr Lewis went on and said: ""Then a fortnight ago, the Court of Appeal ruling came and said 'consumers need to know all material facts including the amount of commission', which opens the door to possible reclaims for all car finance commission and indeed could read across to other lending areas (though it will all depend on if the Supreme Court backs up that view on appeal) and today the FCA said people should log complaints on that too in case of a future time bar (see my earlier post)."

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Mr Lewis continued, saying: ""When mulling this, I find it more difficult to see the unfairness and that redress is due on car finance firms with fixed commission that were following regulator's guidelines. And even then, if it is thought that redress must be due, the test surely must be something like, was it hidden that there was commission and, most importantly, was the commission charged excessive?"

He signed off by saying: "If not, and we move to a model of car finance reclaims of 'any commission if amount wasn't known' was unfair and should all be repaid, it's a push even for me, and may risk being counterproductive to consumers as it is a potentially existential threat to the consumer lending and could both mean less availability and higher costs in future."