An estimated 12 million car finance agreements were mis-sold, with the financial regulator confirming details of a long-awaited redress scheme this week
Martin Lewis is the founder of MoneySavingExpert.com(Image: Getty)
Martin Lewis has issued his reaction to the car finance compensation scheme as he detailed who might be eligible.
An estimated 12 million car finance agreements were mis-sold, with the Financial Conduct Authority (FCA) confirming details of a long-awaited redress scheme this week.
It is estimated that the average payout will be £829 although it will vary depending on individual circumstances. The total amount expected to be paid out is £7.5billion – down from a previously estimated £8.2million.
There will be two separate redress schemes. The first will cover mis-sold car finance agreements between April 6, 2007 and March 31, 2014 and the over will cover agreements between April 1, 2014 and November 1, 2024.
You may have been mis-sold if your agreement had a discretionary commission arrangement, a high rate or commission, or a contractual tie that you were not properly told about.
In his instant analysis, Martin Lewis called the payout scheme “unprecedented” as he explained that firms will have to actively try and identify everybody who was mis-sold and pay them their money back.
However, the MoneySavingExpert.com founder explained you will be paid quicker if you put in a complaint yourself. The FCA has urged people who may be affected to put in a complaint to the lender that provided the car finance.
Martin Lewis has warned people not to use a claims management company or law firm, as these will take 30% of any compensation owed to you.
Martin Lewis said: “So what type of things are included here? It’s quite strict. It’s motor vehicle finance, car, van, camper van, motorbike. Not caravan because it doesn’t have a motor.
“It’s specifically PCP or HP finance, not leasing. And it’s between 6 April 2007 to 1 November 2024. So if you had one of those and you haven’t complained, you want to complain.
“Now, it’s not saying you’ll all get a payout. 35% of those policies, it’s thought, were mis-sold under the regulator’s definition.
“But the important thing to understand is one of the big things that means you were mis-sold is it did one of three different forms of mis-selling. I’ll go into those a bit later…
“But it didn’t tell you what it was doing. It didn’t disclose it to you. So the only way you can know if you were mis-sold, the only way you can know if you’ve got a complaint, is to complain, which is why I’m suggesting you get your complaint in now so that you can find out.”