Martin Lewis says everyone who bought car on finance could get payout in new update

Martin Lewis has highlighted a major development in an ongoing legal case that could affect anyone who has purchased a car on finance. Speaking on Good Morning Britain, the money saving expert explained that all motorists who bought a vehicle through finance might be eligible for an average compensation of £1,100 if an investigation rules in their favour.

The Financial Conduct Authority (FCA) is probing into practices where lenders permitted car dealers or loan arrangers to set their own interest rates for car finance, known as discretionary commission arrangements (DCA). These DCAs could have been added to loans without customers' knowledge.

Although the FCA outlawed this practice in 2021, there has been a surge in customer complaints regarding overcharges prior to the ban.

READ MORE: Tom Daley strips down to his swim trunks as he's unveiled as 'nice bath ambassador'

READ MORE: Woman loses home of 17 years after being battered by bully boyfriend

The news comes after postman Andrew Wrench, from Trentham, challenged two finance companies in the courts. The 60-year-old discovered that car finance lenders had been paying commission to the dealerships where he bought two cars on finance – an Audi TT coupe and a BMW 3 Series – without his knowledge.

He took his lender to county court in Stoke-on-Trent in July last year, hoping to have the commission returned - but his case was merged with two others and elevated to Britain's top appeal court. After a protracted legal wrangle, judges ruled in Andrew's favour against the car finance firms with seismic consequences on a scale not seen since the PPI scandal of the 2000s.

On GMB today, Mr Lewis explained: "So earlier in January this year, the regulator announced that anyone who had had a discretionary commission arrangement on their car finance, which is where dealers could increase the interest on your car finance dealer in order to get more commission it was investigating, and it was urging people to put in complaints as they may be able to get that money back, which could be large now."

This morning, the financial watchdog, The FCA, has announced a consultation period of two weeks to consider extending the deadline for firms to address motor finance commission complaints, according to reports. He explained: "This is on the back of a Court of Appeal ruling a couple of weeks ago and the extension is to incorporate a potential Supreme Court decision.

"I've had it confirmed this applies to ALL car finance commission complaints, not just the Discretionary Commission Arrangements (DCAs) complaints previously covered. What this means: It signals that the FCA is paving the ground to in future broaden the scope of its car finance investigation, so not only at the 40% of past claims that had DCAs (where dealers could increase their commission by increasing interest) but all commissions including fixed commissions."

Mr Lewis indicated that this could mean anyone who has taken out a car finance deal might be eligible and added: "and be potentially due money back (this includes those already rejected as they were told they 'didn't have a DCA'.

"This potentially more than doubles the number of people involved, and would really start to look more like PPI scale of payouts (and a substantial threat to the car finance industry)."

He advised that people should lodge their complaints to register for a potential payout. He further stated: "This broke minutes ago. I'm going to be rewriting my tool to allow other people to complain and put in a provisional complaint So you don't go through a time bar. But what it's looking like cursory. It's only just happened is anyone who's had car finance. But I need to see the dates that are being specific. More of this is going to come out, but it's just everybody in involved. Keep your eye on this. Listen to what's going on. This is big."

For more details on the FCA investigation click here.

To use the Money Saving Expert car finance reclaim tool click here.

Get daily headlines and breaking news emailed to you - it’s FREE