Martin Lewis has issued a warning to millions of motorists who could be owed thousands.
The Money Saving Expert told his viewers that folks who bought a car, van or motorbike on finance prior to 2021 may have signed contracts containing ‘discretionary commission arrangements’, which allowed dealers to adjust the amount of interest offered to customers, in order to boost their commission.
The practice was banned by the Financial Conduct Authority (FCA) in 2021 - but the FCA has since launched an investigation that could result in those who overpaid being refunded.
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Last month, the Financial Conduct Authority (FCA) announced it would be launching an investigation following ‘more than 10,000’ reports to the independent complaints arbitrator, the Financial Ombudsman Service (FOS).
Speaking on his show last night, Lewis said: "These finance firms let brokers and car dealers make up the interest rates, so they could charge more interest, so they got bunged more commission.
"They didn’t tell you that, which means you could not negotiate. You didn’t know it wasn’t a fixed interest and you could bring it down. Millions of you overpaid, crucially, without knowing.
"In this January, four weeks ago [the FCA] launched a huge investigation into what's going on. My view on this, because the regulator won't comment… I don't believe it would have launched this investigation unless it had substantial evidence and the likelihood is the investigation now is to make sure its got everything right so it can't be judicial reviewed."
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While the investigation is still ongoing, Lewis has urged people to get their complaints in now so that they're logged.
He added: "[The FCA] has said to firms, you don't have to reply formally to peoples complaints - it's extended the deadline to deal with complaints until that investigation comes out.
"But my view is, you should be logging a complaint now if you're in the category of people that think this may have happened to you."
The FCA is currently scheduled to publish its findings on 25 September.
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Sheldon Mills, executive director of consumers and competition at the FCA, said: “We are taking a closer look at historical discretionary commission arrangements in the motor finance market following a high number of complaints from customers, which are being rejected by firms.
“If we find widespread misconduct, we will act to make sure people are compensated in an orderly, consistent and efficient way.”
Topics: Martin Lewis, Money, Cars
Claire Reid