If you bought a car, van, or motorbike on finance before 28 January 2021, you might be due a significant refund. A major investigation by the Financial Conduct Authority (FCA) is currently looking into "hidden commission" deals that saw many UK drivers overcharged.
Here is a simple guide on how to use the free tools provided by MoneySavingExpert (MSE) to see if you are eligible and how to start your claim.
What is the Car Finance Scandal?
For years, some car dealers and finance companies had "discretionary commission" arrangements. This meant lenders allowed dealers to increase the interest rate on a loan so the dealer could earn a bigger commission. This was often done without the customer’s knowledge, meaning many people paid much more than they should have.
Step 1: Find Your Past Agreements
If you can’t remember who your finance provider was or how many agreements you had, Martin Lewis recommends using a credit reporting tool like MyEquifax.
By checking your credit file, you can see a list of previous lenders and the dates of your agreements. This is a vital first step if you no longer have your original paperwork.
Step 2: Use the Free Reclaim Tool
You do not need to pay a lawyer or a claims management company to do this for you. MoneySavingExpert has launched a that makes the process straightforward.
Enter your details: Use the MSE tool to generate a formal request.
Use the template: The tool provides an easy template letter/email.
Submit to the provider: You send this directly to the bank or finance company that provided the loan.
The goal of this letter is to ask two simple questions: Was there a discretionary commission arrangement on my loan? And if so, I want to lodge a formal complaint.
Step 3: Wait for the Investigation
The FCA has paused the deadline for firms to respond to these specific complaints while they finish their investigation (expected by May 2025). However, it is important to get your complaint in now to log your place in the queue and protect yourself against any future time limits.
A Warning: Beware of Scammers
Because this is such a high-profile news story, scammers are currently targeting people via text, email, and phone calls.
Ignore "Cold Calls": If someone contacts you claiming they can get you a car finance refund for a fee, be extremely cautious.
Avoid "No Win, No Fee" Firms: These companies often take a large cut (30% to 50%) of any money you get back. You can do this yourself for free using the MSE tool.
Stick to Official Sources: Only use reputable sites like MoneySavingExpert or go directly through the Financial Ombudsman Service.
Summary
If you had a car on finance (PCP or Hire Purchase) before January 2021, it only takes a few minutes to check. Use your credit report to find the lenders, use the MSE template to send your emails, and keep a record of your correspondence. It could result in a payout of over £1,000 depending on the size of your loan.
Source: For more detailed advice visit https://www.moneysavingexpert.com/reclaim/reclaim-car-finance/#tool
