Car finance mis-selling investigation expected to find wrongdoing, regulator says

Nikhil Rathi, chief executive of regulator the Financial Conduct Authority (FCA), made the comments in a speech delivered to the financial services industry on Thursday 14 March.

Rathi said: "While certainty is not something I can provide today, and I cannot prejudge what we might find, I can say in my view it is improbable we will find nothing to report as we look at historic motor finance sales. Some firms will be better placed than others." 

He also confirmed that the FCA's inquiry would proceed on a "more condensed time frame" compared with its earlier action on PPI (payment protection insurance), and called on car finance firms to co-operate fully and provide data "comprehensively and promptly" to make this happen. 

It comes just days after MoneySavingExpert.com (MSE) revealed that over 1,000,000 complaints have now been submitted to car finance firms using our free tool.

What you need to know about car finance commission mis-selling

We cover this off fully in our Car finance reclaim guide, but here's what's happening at a glance:

• This is for people who bought a car, van, camper van or motorbike using Personal Contract Purchase or Higher Purchase deals (not leasing) for primarily personal use between April 2007 and 28 January 2021.

• Lenders said brokers and car dealers were allowed to hike interest rates to earn a bigger commission. These were known as 'discretionary commission agreements' (DCAs) and customers were rarely told about them. Around 40% of car finance deals had DCAs, meaning millions overpaid without knowing. So it's important to check if it may have happened to you.

• In January 2021, the FCA banned DCAs, and in January 2024, it launched a huge mis-selling investigation. The deadline for dealing with complaints has been extended until the FCA reports its findings on 25 September 2024.

• MSE founder Martin Lewis believes it is unlikely the FCA would've launched such a huge public investigation unless it had strong evidence of systemic mis-selling. Yet he says until the FCA reports its findings, nothing is certain – and as one big risk is that there is a time bar placed on complaints, he urges people to log a complaint as soon as possible, to avoid the risk of being timed out.

• There is no need to use a no-win, no-fee claims firm. With the free MSE tool, you just answer a few questions on your car finance agreement (answers aren't recorded, so as not to inadvertently data-mine) and then the tool builds an email to request information on whether you had a DCA, then logs a complaint.