Martin Lewis' biggest hint yet that you could be paid back thousands for buying cars before 2021
Martin Lewis has given the most concrete hint yet that people will definitely be given some kind of compensation if they bought a car before 2021.
So far, more than one million letters of complaint have been lodged by UK residents who took out car finance before 2021. It was triggered by Lewis in a special episode of his ITV1 show The Martin Lewis Money Show Live in January who said that, potentially, billions could be owed to drivers.
It's for car finance deals that were taken out by individuals between 2007 and 2021. But just not cars - we're talking motorbikes, vans, and camper vans too.
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The issue with finance agreements in this time period was that people were not told the interest rates were being increased on their deals; something that was deemed to be unfair by the Financial Conduct Authority (FCA) in 2021.
It banned the practice - something called discretionary commission agreements (DCAs) - after finding out that roughly 40% of finance deals in the 14 years before 2021.
And now, Lewis, who founded the Money Saving Expert website, has spoken about the biggest hint yet as to why thousands could be guaranteed cash back in their pockets.
He made the comments on 'The Martin Lewis Podcast' episode that was released to BBC Sounds on Wednesday (20 March).
Lewis said: "In January 2021, the FCA banned discretionary commission arrangements and in January this year it launched a huge mis-selling investigation. A seismic investigation that frankly I don't believe it would have done unless it thought there was some evidence of systemic wrongdoing.
"And just in the last week, the regulator's boss, the FCA boss, he has said 'it's improbable the investigation will find no evidence of wrongdoing'. Which is one of the strong indicators that a pay out is going to have to come.
"The other is that Lloyds which owns Black Horse, which is the most complained about firm [via Lewis' help form], has put a £450m provision towards potential costs and pay out for this.
"And we've heard today that Close Brothers has put aside money to pay for this. So this is big money."
Last week FCA chief executive, Nikhil Rathi, said it was 'improbable' no wrongdoing would be found. He said: "While certainty is not something I can provide today, and I cannot prejudge what we might find, I can say in my view it is improbable we will find nothing to report as we look at historic motor finance sales.
"Some firms will be better placed than others."
As well as Lloyds' £450m reserves to pay for potential pay outs, the Close Brothers bank suspended its dividend due to uncertainty over the FCA investigation.
Current estimates say it could cost the finance industry some £16 billion.
The bank, which also offers car finance, said it would be 'prudent' take the action in light of 'significant uncertainty about the outcome... at this early stage'.
Lloyds chief executive, Charlie Nunn, said: "The actual amounts could be higher or lower than the provision that we’ve taken, and we just have to see how things develop over the course of the coming months.”
Tom Earnshaw