Earlier this year, it was confirmed that millions of drivers in the UK could be entitled to a significant car finance payout.
Despite the Financial Conduct Authority suggesting that the process could well be a swift one, a legal challenge has led to a significant delay, and some may now be waiting until the end of 2027 for their compensation.
Anyone who took out car finance between 6 April 2007 and 1 November 2024 can claim compensation if they feel it was mis-sold, after the FCA found that firms 'broke the law by failing to disclose important information to customers'.
On average, affected customers were expected to receive £829, although it could be lower or higher depending on individual cases, which naturally would be a welcome boost during a cost of living crisis.
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The FCA initially said that if you've already complained, there is 'nothing stopping lenders paying tomorrow if they want to', but the end of this year is perhaps a more realistic target.
The FCA added: "Millions of consumers will be compensated this year, most of the rest by the end of 2027."
However, the people's champion Martin Lewis has now explained why we might be seeing a delay, after an organisation called Consumer Voice launched a legal challenge to suggest that payouts should be even higher.
While this would be welcome news for those people that are happy to wait for a potentially larger payout, it might well come as a blow to anyone hoping for a quicker boost to their bank.
Consumer Voice says it 'makes money by providing consumer-friendly communications and engagement services to law firms to help raise awareness of claims. In some cases, we take a fee from legal firms when someone from our community joins a claim'.
Its legal challenge will be run for it 'pro-bono' by claims law firm Courmacs. It argues the redress calculation isn’t generous enough and payouts should be higher.
Posting on X, the money saving expert explained how long he expects the delay to last and why he still has some concerns for consumers.
He wrote: "I’ve long said the payout proposed is probably lower than you may get in Court (though then most’d likely have to pay claim-firm fees). My guess is the reason the FCA has done this, ironically, was to avoid car finance firm legal challenges.
"Yet even though the hope is bigger payouts, I have some concerns about this for consumers…
"The most potent is about how much longer this could all take. While Consumer Voice said it hoped there won’t be a delay, the FCA has already said this challenge 'will delay consumers getting compensation'. The big question is for how long?"
He goes on to explain that it could take several months or even a year until a court case is decided, and it's only in the scenario of a 'David vs Goliath' victory that Consumer Voice's legal challenge proves to be beneficial for most consumers.
A loss in court will only result in things being delayed further, without any financial gain, so hopefully there's a swift victory for the consumers in this case.
Topics: Martin Lewis
James Moorhouse