Martin Lewis issues £1,100 warning to 'car, van or motorbike' drivers

Martin Lewis has explained how millions of car owners could get a £1,100 payout. The BBC Sounds star spoke out over a "landmark ruling" as he offered an update over the car finance mis-selling scandal to Money Saving Expert newsletter subscribers.

ITV star Mr Lewis' update comes as The Financial Conduct Authority (FCA) investigates the practice where lenders permitted car dealers or those arranging the loan to alter the interest rates offered to customers for car finance.

This was known as a discretionary commission arrangement (DCA) and it may have been applied to a person's loan without their knowledge. After a court ruling last week, Mr Lewis say payouts - which he previously estimated at around £1,100 each - are "more likely".

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He wrote: "Did you buy a car, van, camper van or motorbike on finance? Get a complaint in ASAP. Our Car finance reclaiming guide takes you through it step by step, but in a nutshell, you may be able to claim £1,000s back due to HIDDEN Discretionary Commission Arrangements (DCAs) on your policy.

"These DCAs are where finance firms let car dealers pump up interest rates, without customers being told, and then bunged 'em extra commission if they did. This meant many likely OVERPAID WITHOUT KNOWING and may be due an average £1,100 back."

Offering an update, he added: "A shock exploded through the car finance world on Friday, as the Court of Appeal issued a precedent-setting ruling favouring consumers over finance firms." He said: "The verdict was unambiguous and said a car sales firm couldn't lawfully receive commission from a finance firm unless it had the customer's 'fully informed consent'."

Mr Lewis says the ruling increases the likelihood of car finance compensation - offering a major boost for motorists who have been impacted. Lloyds Banking Group, which is the most exposed among UK high street banks, has already put aside £450m for potential fines, while Close Brothers earlier this year cancelled its dividend and announced plans to raise £400m to shore up its balance sheet.

The FCA said: “We note the court of appeal judgment … and are carefully considering its decision.”