Martin has shared his initial thoughts on the FCA’s latest announcement (Picture: ITV)
The Money Saving Expert has warned that millions of people who have bought a car on motor finance could be owed money.
Martin Lewis has dubbed the announcement from the Financial Conduct Authority (FCA) as ‘the new PPI’ – a scandal which saw billions of pounds refunded after Payment Protection Insurance was mis-sold.
The FCA is investigating the handling of complaints about commissions when people got motor finance. Two recent ombudsman cases revealed today suggest that firms are falsely rejecting complains.
This means the FCA is now planning a full review of complaint handling, and Martin reckons they ‘wouldn’t do this unless it was likely to find they were doing it wrong’.
He added: ‘My suspicion is when it finishes its investigation it will set up either A) a redress scheme where it orders all the firms to pay redress to every effected customer even if they’ve not complained; or B) redress rules where it orders them to pay out redress based on a set formula, to those that complain.’
‘The pay out would be either the interest on loans (which is big), the commission (which is big), or the whole loan (which is huge).
You could be affected if you bought a car on motor finance before 2021 (Picture: Getty Images)
‘We’re possibly talking thousands back for many.
‘Clearly this means getting complaints in if you were mis-sold is going to be crucial, especially if they choose scheme B and there is a cut off involved.’
He says the situation could lead to ‘a payout for millions who bought a car/van on motor finance before 2021’.
And while he and his team are still crunching the numbers, his initial calculations suggest ‘at the top end’ this could lead to PPI-scale payouts – which reached £40 billion – or be big enough to be a form of quantitative easing.
Quantitative easing is when the Bank of England buys bonds to push up their prices and bring down long-term interest rates, which in turn increases spending and puts upward pressure on the prices of goods and services.
However, Martin added that the FCA has put a freeze on firms handling complaints about motor finance, so any complaints submitted now won’t be dealt with.
He does say anyone who thinks they’ve been mis-sold motor finance could submit a complaint now ‘as a marker’.
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Martin added: ‘My team and I will be working on a full guide on how to do that which we’ll have out in the next couple of weeks to talk you through this step-by-step.
‘Please watch this space and share with people who may have been impacted.’
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‘We’re possibly talking thousands back for many.’