February 6th 2024.
In a shocking turn of events, Martin Lewis, the founder of MoneySavingExpert.com, has revealed that a large number of drivers in the UK may be eligible for refunds if they purchased their vehicle on finance. During his ITV show, Martin disclosed that those who took out car finance prior to January 28, 2021, could potentially receive thousands of pounds back.
According to Martin, around 40% of car finance deals included a questionable "discretionary commission arrangement" that allowed car dealers to manipulate the interest rates and increase their own commission. While this practice was banned by the Financial Conduct Authority in 2021, a new investigation has been launched to delve deeper into the matter.
The investigation will focus on personal contract purchases and hire purchases, but leasing will not be included. Martin emphasizes that this issue affects not only car owners, but also those with vans, campervans, and motorbikes, as long as they were for personal use and not business use.
Based on FCA data, Martin estimates that drivers may have paid an extra £1,100 in interest on a typical £10,000 four-year finance deal if a discretionary commission arrangement was in place. And for larger loans, the potential refund amount could be even higher. In light of this, Martin is urging those who may have been affected to log a complaint as soon as possible.
The root of the problem lies in the fact that finance firms allowed brokers and car dealers to set their own interest rates, resulting in higher interest charges and more commission for them. This was often not disclosed to the customers, leaving them unaware that they could negotiate for a lower interest rate. As a result, millions of drivers unknowingly overpaid for their vehicles.
The FCA's investigation, which is set to be published on September 25, 2024, is a clear indication that there is substantial evidence to support these claims. Martin believes that the FCA's actions show their commitment to the matter and that they are taking steps to ensure that justice is served.
In light of this, Martin is urging anyone who may be eligible for a refund to file a complaint without delay. He fears that the FCA may impose a time-limit for reclaiming money, and he doesn't want anyone to miss out on this opportunity. So if you bought your vehicle on finance before January 28, 2021, it's time to take action and claim what is rightfully yours.
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