Compensation claims: What to do if you think you've been mis-sold car finance

Credit: Pexels

By Daniel Boal, ITV News Producer

Millions could be due a huge payout after a major investigation was launched into the mis-selling of cars and vans on finance.

The Financial Conduct Authority has launched an investigation into whether vehicle buyers were overcharged, prompting the biggest claims surge since the PPI scandal.

Before January 2021, some lenders allowed brokers (the person arranging the loan, for example, a car dealer) to adjust the interest rates they offered customers for car finance.

ITV News research has uncovered that almost 870,000 claims or initial enquiries are already underway, which experts say could lead to billions of pounds in compensation.

If you signed a financial agreement when buying a car before January 2021, there is a chance the dealership added "discretionary interest rate" commissions to your repayments to boost their earnings - and now you could be owed compensation.

But how do you know if you have been affected?

As almost 870,000 people submit claims for being overcharged, the first step in lodging your own can be to check how likely you are to have been affected.

  • Have you bought a motor vehicle on finance?

  • Did you take out a financial agreement before January 28, 2021?

  • Is your vehicle used for personal use rather than business?

  • Compensation can be claimed for someone who had died, but still overcharged

  • Personal Contract Purchases and hire purchase can also be claimed for

  • You can still claim if the car is fully paid off

  • You can't complain if you received interest free finance

If one or more of those points applies to you it is likely you can make a valid complaint.

Who do you complain to?

  • The first place to complain is the dealership that sold you the car. If the dealership confirms that a "discretionary commission" you can ask for compensation.

  • If you're displeased with the dealership response, you can then take your complaint to the Financial Ombudsman service (FOS). You should hear back from them within 10 working days and have a decision within three months.

Making a complaint

It’s free and simple to complain to your provider and the Financial Ombudsman if you’re unhappy with a financial product or service.

The Financial Ombudsman has information about making a complaint and car finance complaints, while Consumer Voice has a free template for contacting your finance company.

Martin Lewis, Money Saving Expert, has a free tool to start a claim here.

Alternatively, a claims management company (CMC) can make a complaint for you, but you’ll have to pay a fee. 

Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know...