Martin Lewis warns drivers 'could be owed thousands' over car finance

Martin Lewis has made a bombshell revelation that drivers who bought their car on finance could be owed thousands of pounds.

The MoneySavingExpert.com founder revealed on his ITV show on February 6 that people who took out car finance before January 28, 2021, could be entitled to money back.

He said that ‘around 40%’ of deals would have included an unfair ‘discretionary commission arrangement’.

It allowed car dealers to adjust the interest they offered to customers and in turn meant they could increase their own commission.

The Financial Conduct Authority (FCA) banned dealers from doing so in 2021 but a new investigation has now been launched by the regulator.

Anyone affected could be in line for repayments – and Martin Lewis said on Tuesday that he believes billions of pounds could be returned to millions of motorists across the country.

Investigators will examine personal contract purchases and hire purchases, however the probe will not include leasing.

The findings of the investigation are set to be published on September 25, 2024.

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People who own a car, van, campervan or motorbike could be owed money back, as long as it was for personal use and not business use.

According to FCA figures, Martin believes drivers likely paid around £1,100 more interest on a typical £10,00 four-year finance deal wherever a discretionary commission arrangement had been put in place

If the loan was bigger, the money a driver would be owed back would be higher, he said.

‘These finance firms let brokers and car dealers make up the interest rates, so they could charge more interest, so they got bunged more commission,’ Martin said on ITV tonight.

‘They didn’t tell you that, which means you could not negotiate. You didn’t know it wasn’t a fixed interest and you could bring it down. Millions of you overpaid, crucially, without knowing.

‘In this January, four weeks ago [the FCA] launched a huge investigation into what’s going on. My view on this, because the regulator won’t comment…

‘I don’t believe it would have launched this investigation unless it had substantial evidence – and the likelihood is the investigation now is to make sure it’s got everything right so it can’t be judicially reviewed.’

Martin has urged people to log a complaint right away in order to avoid missing out if the FCA imposes a time-limit to reclaim money.

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