Have you been mis-sold car finance?

Martin Lewis has advice for those who have or who are planning to put in a car finance mis-selling claim.

In March, the financial regulator, the FCA, announced a £9bn mass redress scheme for 12 million mis-sold motor vehicle finance agreements. We've a totally free complaint tool, but an avalanche of claims management companies (CMCs) have also been getting in on the act, and they take a chunk of any money you'll be paid. The FCA has just warned against misleading CMCs, saying it has seen 'far too many examples of poor practices'. Yesterday, it took the important symbolic step of launching a template letter for you to complain - more in help complaining about Claims firms below.

Britain’s financial watchdog is done playing nice. The Financial Conduct Authority has pulled or amended more than 1,000 misleading car finance promotions since January 2024, and it’s not slowing down. The crackdown centers on claims management companies — CMCs — and law firms running ads that look like independent financial advice but aren’t. These promotions push motor finance compensation claims while hiding the fact that they’re paid for. Some go further, lifting logos and imagery from well-known brands and faces to fake endorsements. The FCA banned one CMC outright for using unauthorized clips of consumer finance commentator Martin Lewis to imply he backed their car finance compensation service.

In this episode, Martin Lewis explains the latest on car finance mis-selling, discussing the reasons for delays in payouts and advising consumers on how to protect their claims and maximize potential payouts. He also addresses concerns about consumers unknowingly signing up with claims firms and provides guidance on how to avoid such situations.

Due to ongoing legal challenges, compensation payments under the UK's Financial Conduct Authority's (FCA) motor finance redress scheme are unlikely to begin before 2027. The scheme addresses the mis-selling of car finance agreements involving undisclosed commissions, affecting approximately 12 million contracts. The FCA estimates that 75% of eligible consumers will claim, with total payouts potentially reaching £7.5 billion. However, the scheme faces four legal challenges—one from a consumer group citing fairness concerns, and three from major lenders disputing the financial burden. If upheld, these challenges could lead to major revisions or the scrapping of the redress scheme, with affected consumers needing to pursue individual complaints via the Financial Ombudsman Service or the courts. The FCA still urges consumers to lodge complaints in time, especially as early complaints may be prioritized for compensation. Covered loans span from April 2007 to November 2024, and average compensation is estimated at £830. High-value loan claims are excluded but can still be pursued individually. Consumers can submit complaints directly through the FCA and are advised to avoid fee-charging claims firms, which may reduce payouts by over 30%.