Easy ways to check if you were mis-sold car finance and make a claim for compensation

Millions of Brits may have been mis-sold car finance if they purchased a vehicle prior to January 2021.

The Financial Conduct Authority (FCA) is currently investigating a scandal in which lenders permitted brokers to alter the interest rates they offered customers for car finance. The higher the interest rate, the more commission the broker earned.

These discretionary commission arrangements (DCAs) sometimes resulted in customers paying more than necessary, as brokers were incentivised to hike up the charges.

In 2021, the FCA outlawed this practice and is currently scrutinising these agreements. It stated on its website that since the ban, there has "been a high number of complaints from customers about how much they were charged before the ban".

The authority further noted: "Providers were rejecting most of these complaints, because they believe they haven't acted unfairly and haven't caused customers to lose out. Once we get the Supreme Court's decision, if we find that motor finance customers have lost out, it's likely we'll consult on introducing a redress scheme."

If you bought a motor vehicle on finance before 28 January 2021, you might be eligible to claim. This doesn't only apply to cars, but also includes vehicles like vans, camper vans and motorbikes.

If you suspect you might be entitled to lodge a complaint, you can check for free - the FCA has a guide on how to do this here. For instance, if you feel your car finance agreement was unfair or you weren't informed about the dealer's commission for arranging the deal.

The FCA is scrutinising these agreements and should it uncover "widespread misconduct" leading to consumer detriment, it will consider ways to ensure compensation. Meanwhile, individuals can still file complaints during the authority's investigation.

While checking eligibility is free, opting for a Claims Management Company (CMC) is discouraged by the FCA due to potential fees. These firms may assist with claims or refer you to solicitors, but they do charge for their services.

Should you decide to use a CMC, verify its FCA approval via their firm checker, or ensure it's regulated by a legal body. More information is available on the FCA website. One red flag is if a company does not make you aware that you could file the complaint yourself at no cost.

Some examples of CMCs which are authorised by the FCA include:

• My Claim Group
• Allegiant Finance Services

The FCA recommends: "Claims management companies (CMCs) are aware of the time limits that apply depending on the stage of your complaint. Your CMC should keep you up to date on the progress of your complaint. Contact your CMC if you want more information."

A significant development in the controversy occurred last October, when the Court of Appeal found non-disclosure of commissions on car loans to be illegal. Following this decision, the Financial Ombudsman Service reported a spike in complaints, with a record-breaking 18,658 new cases concerning car finance in the final quarter of 2024.

Yet in January 2025, the UK Chancellor Rachel Reeves stepped in intending to shield lenders from the risk of multibillion-pound reimbursements, highlighting her concerns about the economic fallout and how it might affect consumer access to car loans.

Currently, the Supreme Court is deliberating over a crucial appeal from car loan companies challenging earlier decisions that went in favour of consumers. In light of this, the FCA has put a temporary hold on processing complaints until a verdict is delivered later in the year, a decision which will be essential in establishing the financial responsibility of lending institutions.

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