Martin Lewis says millions of car owners could be owed £1,100

Martin Lewis says that all motorists who financed a vehicle could be eligible for an average payout of £1,100 if an ongoing investigation rules in their favour. The Financial Conduct Authority (FCA) is currently investigating the practice where lenders allowed car dealers or those arranging the loan to adjust the interest rates offered to customers for car finance.

This was referred to as a discretionary commission arrangement (DCA) and it may have been applied to a person's loan without their knowledge. The FCA banned this in 2021 but there have since been numerous complaints from customers about the charges they incurred prior to the ban.

Most of these have been dismissed by the brokers, primarily car dealers, but the FCA investigation, due to report back in May 2025, will determine if this is fair. Mr Lewis explained: "It was about discretionary commission arrangements. That's what lenders said to car dealers and brokers. You can make up the interest rate, and if you push it higher, we will give you more commission."

"And this was done without informing consumers. So it was concealed. They were unaware of it. And up to 40% of car finance deals over the period we're discussing had this discretionary commission arrangement. So are you one who may be owed thousands back? " "Well, the average payout if it happens and it's not certain it will happen, would be 1100 pounds. This is for personal motor vehicles, cars, vans, motorbikes and camper vans, not static caravans."

Individuals might have a claim if they've bought vehicles through personal contract plans or hire purchase agreements, but not leases, particularly for transactions made between April 2007 and January 28, 2021. This timeframe is crucial as it marks the end of discretionary commission models by the Financial Conduct Authority (FCA), often known as DCAs, reports the Express.

The lack of DCA disclosure means customers should take the initiative to investigate their contracts. Mr. Lewis recommends: "So you have to put in a request and say 'did I have a DCA? And if I did, I want to put in a formal complaint'. Now, while nothing will happen until May, when the FCA reports you should log a complaint as soon as possible in case there's a time bar later."

He emphasises the need for prompt action, saying: "So the earlier you get your complaint in the better in case it stops you being time barred because we've got so much uncertainty."

Mr Lewis has highlighted that there are no-cost alternatives to 'no win no fee' solicitors, such as free tools available online. This sentiment is shared by over 2.4 million individuals who have successfully used the tool on the Money Saving Expert website.

He also drew attention to the Court of Appeal's stance that car firms cannot earn commissions without obtaining the customer's fully informed consent. He explained: "To get fully informed consent, the customer must know all the facts, including the amount of the commission, which was never told. That is a radical clear viewpoint. It increases the likelihood of car finance mis-selling compensation via the FCA next May because the FC had delayed due to these court cases to see what was said."