Martin Lewis explains car finance compensation as millions could get £700 payout

Martin Lewis explains car finance compensation as millions could get £700 payoutGood Morning Britain, ITV

Transcript

00:00This is the biggest form of financial services redress that we've seen since PPI. It's 40 million

00:05of the 32 million agreements that were in place between January 2007 and November 2024. Let me

00:12talk you through the three types of misselling that have been identified here. The first one

00:17is the one I've talked about many times and the one the three and a quarter million template

00:21letters that have come from my website are all about and that's discretionary commission

00:25arrangements. That is when you went to get a car and on finance and we're talking specifically

00:32HP or PCP deals not leasing here and the dealer got paid a higher commission because you had

00:40been charged a higher interest rate to pay it. You didn't know that. You didn't know there

00:46was a discretionary commission and in fact that's why the template letter and the first thing

00:50in the letters that I've drafted does is ask did I have a DCA because the whole point in

00:55all the three types of misselling is it was there was inadequate disclosure. It's not just

01:00that these things happened it's that you were never told about it and the vast majority of

01:05times you were never told about it. So that's a discretionary commission arrangement. That's

01:0911.5 million agreements. The next one is where there was a hidden contractual tie. That means

01:15they said we'll find you the best lender from a panel of lenders but they didn't. One of those

01:20lenders had first dibs and if it wanted you they would just give it to you so it wasn't really

01:25a competitive market. That's 3 million cases. Again you won't know. You're going to have to

01:30find out about that. And then the final one is where the the frankly the commission was just too

01:36high and that's if over 35 percent of the cost of the credits if 35 percent of the interest of you

01:42like was a commission and over 10 percent of the total cost of the loan then it was defined that

01:49that was a market distortion in its own right because the commission was too high if it wasn't

01:53disclosed to you and you could be owed money back. Now if you add up those total numbers it's over 14

01:59million agreements. That's because in some cases it may be more than one or more than two and what

02:03you'll get back in most cases is 17 percent of the interest. So for every thousand pounds of interest

02:10you were charged you'll get back 170 pounds roughly. That's how it's going to work. How do you do it?

02:15Well if you've already complained you don't need to do anything else. This will probably start

02:19sometime next January or February. The lenders will have three months to write to you if you've

02:24complained and it will be an opt-out. So if you then do nothing you're going to get the money

02:29assuming you were missold. If you haven't complained lenders have to identify the people who have been

02:35missold and they have six months to write to them and then you they'll get in touch with you. It might

02:40not be a letter it could be an email or another form of contact. We'll know when we get nearer the time

02:43and then you will have to opt-in. So you'll just simply have to say yes I want that complaint to go

02:48three.