Mis-sold car finance: ITV News figures show 865,000 seek compensation claims

Exclusive ITV News figures show hundreds of thousands of car loan customers are preparing to make compensation claims, ITV News Consumer Editor Chris Choi reports

New research from ITV News shows car loan firms are now likely to face compensation claims from hundreds of thousands of customers.

The Financial Conduct Authority is investigating whether some vehicle buyers were overcharged, kickstarting the biggest claims surge since the infamous PPI scandal.

Financial officials are investigating car loans taken before January 28, 2021, when the law changed banning “discretionary interest rate” commissions.

It’s claimed that these allowed car dealers to add to a buyer's repayments to boost earnings via commissions.

One car sales insider, who did not want to be named, told ITV News the practice of discretionary rates was “widespread” with “kickbacks” for the car dealer.

As he explained: “there is no money in the metal”, the route to higher commissions was through loan deals. However, loan providers have denied that the deals were illegal or unfair. 

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Our new findings show the 866,400 claims or initial enquiries are underway, which experts say could lead to billions of pounds in compensation.

Some of these claims date back three years and experts say there are many more yet to be disclosed.

It’s free and relatively straightforward to complain to your car loan provider and the Financial Ombudsman - we are providing some useful links below.

A claims management company can take away some of the work, but they can charge 15-20% of your compensation. Even if you make a claim, firms don’t need to respond until 25th Sept at the earliest.

Consumer expert Alex Neill shares her top tips if you think you might be eligible to claim

My ITV colleague Martin Lewis is rightly credited with directing public attention to loan compensation claims and believes millions could eventually be due payouts on a scale in the same league as PPI, which was worth just under £40 billion.

There are potential bumps in the road ahead, with fears that the sheer number of claims will swamp financial firms.

That’s why it’s vital that officials establish a fair and consistent way for any payouts to work.

Another big danger is that these claims are not covered by the Financial Services Compensation Scheme, so if your loan provider goes out of business - you may not get what you are owed.

Perhaps the biggest hurdle will be the response from loan firms, who so far have denied that customers were treated unfairly. 

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