myfinanceclaim.com<\/a>.<\/p>\nFollowing mydieselclaim.com, which it advertised aggressively in wake of the car emissions scandal, the firm is telling consumers who used car finance that they could be in line to recover up to \u00a34,000.<\/p>\n
It comes in the wake of the Financial Conduct Authority (FCA) announcing earlier this month that it was assessing the extent of the problem.<\/p>\n
This in turn followed the Financial Ombudsman Service issuing its first two final decisions on motor finance commission, both in favour of the borrower, against Barclays Partner Finance and Black Horse.<\/p>\n
Chief ombudsman Abby Thomas said these decisions \u201ccould signal the way forward for many more similar complaints that have not been resolved between firms and consumers\u201d.<\/p>\n
She added: \u201cWe\u2019ve heard from more than 10,000 people who fear they were charged too much for their finance, and we know many more are waiting in the wings.\u201d<\/p>\n
Consumer finance guru Martin Lewis reacted to the FCA move by tweeting: \u201cI\u2019ve done back of the envelope numbers and at the top end this could be PPI-type scale (that was \u00a340 billion).\u201d That is a reference to the payment protection insurance scandal.<\/p>\n
The FCA said: \u201cBefore January 2021, some lenders allowed brokers (the person that arranges the loan, for example, your car dealer) to adjust the interest rates they offered customers for car finance.<\/p>\n
\u201cTypically, the higher the interest rate, the more commission the broker received. This was known as a discretionary commission arrangement. Discretionary commission arrangements created an incentive for brokers to increase how much people were charged for their car loan.<\/p>\n
\u201cWe banned this practice in 2021. But there have since been a high number of complaints from customers about how much they were charged before the ban. Providers (lenders and brokers) are rejecting most of these complaints, because they believe they haven\u2019t acted unfairly and haven\u2019t caused customers to lose out.\u201d<\/p>\n
The FCA said this borrowing was not covered by the Financial Services Compensation Scheme, meaning that if complaints were not dealt with in an orderly way and providers went out of business, consumers might not get what they are owed.<\/p>\n
Pogust Goodhead said the evidence suggested that \u201cmillions of drivers could be in line for substantial payouts\u201d after entering personal contract purchase or hire purchase agreements without fully understanding the conditions or costs involved.<\/p>\n
Some people were hit by high interest or additional charges and even had to take out another loan to help finance the agreement, it said.<\/p>\n
Chief executive Tom Goodhead said: \u201cThis is a watershed moment. It\u2019s high time that lenders are held to account over unfair practices that have left consumers unnecessarily out<\/em> of<\/em> pocket.\u201d<\/em><\/p>\nMr Lewis said: \u201cThe FCA wouldn\u2019t do this unless it was likely to find they were doing it wrong.\u201d<\/p>\n
He predicted the FCA would either set up a redress scheme where it ordered all the firms to pay redress to every affected customer even if they have not complained, or introduce redress rules \u201cwhere it orders them to pay out redress based on a set formula, to those that complain\u201d.<\/p>\n
The payout would be either the interest on loans, the commission or the whole loan. \u201cWe\u2019re possibly talking thousands back for many,\u201d he said.<\/p>\n
The FCA has frozen the eight-week deadline for providers to respond to complaints about car finance involving this type of commission pending its investigation. Consumers can still complain to their provider, but they will not have to respond until after 25 September at the earliest.<\/p>\n<\/div>\n
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