00:00The Financial Conduct Authority says millions of car finance agreements could now qualify for compensation
00:08after finding some motorists were not given key information when they took out loans.
00:13Average payments are expected to be worth hundreds of pounds
00:17and money-saving expert Martin Lewis has been explaining what drivers need to check
00:22and what steps they may need to take next.
00:25It's likely 12 million deals were missold and the average payout will be £830 per agreement.
00:34We have just had the confirmation of the mass redress scheme from the financial regulator, the FCA.
00:42Now what's really important to understand is this is a mass redress scheme.
00:47In other words, not only will firms have to give compensation to the people who were missold who've complained,
00:55they will have to try and identify everybody who was missold between 2007 and 2024,
01:03contact them and pay them their money back, hence the mass scheme.
01:07For many drivers, the striking thing about this story is not just the size of the compensation they're being talked
01:14about,
01:14but how long it's taken to get here.
01:17The issue goes back years to the way some motor finance deals were sold before tighter rules came in.
01:23In some cases, brokers and dealers could earn more commission by arranging a higher interest rate for the customer.
01:30The Financial Conduct Authority banned that kind of discretionary commission model in January 2021,
01:38saying it created the wrong incentives and risked customers paying more than they should.
01:43But even after that ban, questions remained about the huge number of agreements already written before the rules changed.
01:50In January 2024, the FCA announced a formal review into historic Car Finance Commission complaints,
01:59effectively acknowledging the issue might be much wider than many customers had first realised.
02:05Then came a major legal turning point.
02:08In October 2024, the Court of Appeal ruled in a set of linked motor finance cases
02:15that brokers could not lawfully receive commission from lenders without the customer's informed consent.
02:21That judgment pushed the issue beyond the narrow question of discretionary commission alone
02:26and helped open up a wider argument about transparency, disclosure,
02:31and whether customers really knew how those deals were being arranged in the first place.
02:35That is one reason this story has grown so dramatically.
02:38What began as concern over one commission model has turned into a much broader examination
02:44of how car finance was sold across the market over a long period of time.
02:49The regulator now says that around 12.1 million agreements are eligible under the scheme, it is confirmed,
02:56with firms facing an estimated total bill of around £9.1 billion.
03:03Average compensation is put at roughly £829 per agreement,
03:08although the exact figure in any individual case will depend on the details of that loan
03:13and the type of commission involved.
03:16Even so, the FCA is making it clear that this will not be an overnight process.
03:21Firms are being given time to prepare before they begin carrying out the checks needed under the scheme.
03:26For loans taken out from 1 April 2014, the inflammation period runs until 30 June 2026.
03:36For older agreements, it could run until 31 August 2026.
03:42So after years of complaints and court action also review,
03:46the focus now shifts from whether a redress scheme would happen at all
03:51to how smoothly it can be delivered,
03:53how people ultimately qualify and how quickly drivers start seeing money arrive.
03:59And here's Martin Lewis with advice on how you can claim for free.
04:04As for how to complain, well, if you want to use the mass redress scheme,
04:08it's very simple, you don't need to pay anyone.
04:10I have a totally free tool on my website, moneysavingexpert.com.
04:14Just search moneysavingexpert and car finance,
04:16and there should be a picture of me at the top somewhere,
04:18which will show you that it's that.
04:20We've had 3.6 million complaints go through it.
04:23Most people tell me it's dead easy.
04:24You just put your details in.
04:25It formulates an email for you and tells you where to send it.
04:28You check it and you press send.
04:30So what type of things are included here?
04:34It's quite strict.
04:35It's motor vehicle finance, car, van, camper van, motorbike,
04:41not caravan because it doesn't have a motor.
04:43It's specifically PCP or HP finance, not leasing.
04:47And it's between the 6th of April 2007 to the 1st of November 2024.
04:55The Financial Conduct Authority says not every agreement will qualify
05:00and not all payments will be made at once.
05:02But after years of uncertainty, there's now a clearer route
05:05for millions of drivers to find out whether they are amid sole car finance
05:09and whether there may be finally due compensation.
05:12For more information, visit www.fema.org.
05:13For more information, visit www.fema.org.
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