Mis-Sold Car Finance: What You Need to Know
You may have heard about the growing issue of mis-sold car finance in the news. For many, it sounds complex and unclear. If you’ve been in the military and we’ve spoken to you before about other types of claims, this plain-English guide will help you understand what’s happening and why you might be eligible for compensation.
What’s the Claim About?
When you bought a new or used car from a dealer, they likely offered to arrange the finance for you. While this seemed convenient, the reality is that dealers often earned substantial commissions from finance companies for arranging these deals.
Here’s the catch: the commission paid to the dealer was built into the interest rate you paid, meaning you ended up paying for it without knowing. The law requires that you should have been informed of these commissions, including their exact amounts. Had the finance company not paid this commission, your monthly payments could have been lower.
For instance, on some new cars, the dealer’s commission could have exceeded £3,000. Over a three-year finance deal, this might have added over £80 per month to your payments. If you’re a two-car family with vehicles on finance over the last 10 years, this could mean you’ve overpaid by as much as £20,000.
Would you have agreed to this had you known? Likely not. That’s why the industry kept these commissions a secret.
What’s Happening Now?
There are two main ways to claim back overpaid money:
1. Through the Financial Ombudsman Service (FOS):
The Financial Conduct Authority (FCA) originally allowed claims to be processed through the FOS. However, the FCA paused these claims for 37 weeks earlier this year, citing the need to investigate and establish a redress scheme. The deadline for these investigations has been extended until December 2025, and the FCA is expected to announce next steps in May 2025.
2.Through the Courts:
Some individuals pursued claims via the courts, which finance companies defended aggressively. Recently, the Court of Appeal ruled in favour of consumers, but finance companies are now appealing to the Supreme Court. This could take another 6–12 months to resolve.
The positive news is that major finance companies are beginning to allocate funds for substantial payouts.
What Should You Do?
• If You’ve Already Signed Up:
If you’ve already submitted your claim, you’ll need to wait. Payments are unlikely to be issued for at least 6–12 months.
• If You Haven’t Signed Up Yet:
Now is the time to act. By signing up sooner, you’ll secure your place in the queue. Waiting could mean delays in receiving your compensation.
We’ve partnered with Reclaim My PCP, making it easy for you to start your claim. Click below to sign up:
Don’t let the finance companies keep what’s rightfully yours. Take action today and ensure you’re in line for the compensation you deserve.
