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Martin Lewis has issued what he calls a 'sooner not later' warning after revealing that more than one million letters of complaint have been lodged by Brits regarding their car finance agreements.
The finance guru and his team of experts took to his Money Saving Expert website today (11 March) to give an important update on the situation for anyone who bought a car on finance before 2021.
It comes just days after he was helping us figure out how much we'll benefit from a 2% cut in the National Insurance rate.
At the beginning of 2024, Lewis revealed that millions of UK residents would be owed 'billions' in a combined pot of compensation.
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It's applicable to those who took out finance on camper vans, cars, motorbikes or vans from 2007 to 2021.
Long story short - finance companies said that brokers and car dealerships could up interest rates on deals to earn a bigger commission locally. Called discretionary commission agreements (DCAs), roughly 40% of all car finance deals in the above timeframe were subject to them with barely any customers knowing.
DCAs were banned in 2021 with the Financial Conduct Authority subsequently investigating the mis-selling operation.
His team said that of the 1,080,000 people who had lodged complaints so far, at least £480 million will be due if they are legit claims.
Now, Lewis has said that while the complaints so far are 'staggering', those who haven't lodged their potential claim should do it 'sooner, not later'.
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He also revealed the finance companies to which the most letters of potential claim have been lodged, with Black Horse (which includes Land Rover, Suzuki and Jaguar) at the very top. It makes up 16.1% of all claims through Lewis' nifty tool.
Volkswagen Financial Services (Audi, Skoda, Seat) came in second at 14.1%, with Stellantis Financial Services (Fiat, Vauxhall, Citroen, Peugeot) third at 8.4% of all claims.
Lewis said: "The numbers of complaints in not much more than a month is staggering – off the charts – far more than I expected.
"So, it’s not surprising that some firms are struggling to respond to complaints in a decent time.
"To frustrated complainers, I’d say for now we should be prepared to give companies some wriggle room on timings, but firms need to urgently step up their complaint handling resources.
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"And this is just the beginning. Even though we were at the vanguard of PPI and bank charge reclaiming, in terms of numbers of complaints, this feels like it is building up even more quickly.
"In value terms, car finance mis-selling is potentially going to be the second biggest reclaim payout in UK history – possibly over £10 billion repaid – which could even provide a fillip to the economy as PPI did.
"Lloyds has already put aside a provision of £450,000,000 towards potential costs and payouts for this. A strong indication that it thinks it, and by inference others, will probably need to pay back money due to discretionary commission arrangements mis-selling.
"Though of course, we won’t know until the Financial Conduct Authority's (FCA’s) ruling due in September.
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"And it’s because we don’t know what the FCA will say in September, that eligible people should look at logging a complaint sooner not later – as the unknown means there’s the risk people may be ineligible if they wait to claim.
"The regulator’s own website information indicates timing may be an issue and says 'so, if you think you could be running out of time, you should consider complaining to your provider now'."
Featured Image Credit: ITV / Getty Stock ImagesTopics: Martin Lewis, Money, UK News, Cars, Travel