He urged people to check for themselves as you won’t know if you were affected
Martin Lewis says people need to check their paperwork or risk missing out on more than £800. He highlighted the issue on his BBC podcast, warning that people will be completely unaware they are affected.
Millions of consumers are believed to be owed compensation after being historically mis-sold car finance. The Financial Conduct Authority (FCA) has indicated that those affected could be owed an average of £829, with some 12.1 million loans affected.
The matter concerns loans taken out to purchase a motor vehicle between April 2007 and November 2024, during which time firms failed to disclose crucial information to their customers. FCA officials have mandated that there will be an “industry-wide scheme” to ensure people receive their rightful compensation.
Lenders have been ordered to look their records to identify those affected, but Mr Lewis urged people to dig through their own financial paperwork. Mr Lewis urged anyone who may have been affected to lodge a complaint with their finance provider.
He said that this step is particularly important given that most people will have no idea they were mis-sold the loan in the first place. He explained: “One of the key definitions of mis-selling is they did one of three different types of mis-selling and they didn’t declare it to you, they didn’t tell you.
“You won’t know, you can’t know if you were mis-sold, so the only way to know if you were mis-sold right now is to complain.” He outlined three further compelling reasons why you should submit your complaint.
Mr Lewis said: “Your payout will be quicker, likely in 2026, not 2027. Secondly, if you haven’t complained and the firm doesn’t have your car finance agreement and you do, you will miss out.
“Third, you may have moved house, you might have even moved three or four times, you might have changed name if you got married. On all of those things, the firm might not be able to contact you, whereas if you’ve complained, you can put in all of your details.”
Who could be owed compensation?
Mr Lewis explained there are three types of motor vehicle loan where people were potentially mis-sold the product, between April 2007 and November 2024. This could apply if you took out a PCP (Personal Contract Purchase) or a HP (Hire Purchase) loan between these dates.
These can include:
- Discretionary commission arrangement – this is where the car finance broker could increase your interest rate to increase their commission, without telling you
- Contractual ties – where you were told your application for finance would go to a panel of lenders, but it failed to do this
- The level of commission was too high.
