1,000,000 car finance complaints submitted since Martin Lewis and MSE’s tool launched in February

The most complained-to firms are Black Horse (16%), Volkswagen Financial Services (14%) and Stellantis Financial Services (8%)

The UK’s biggest consumer help website MoneySavingExpert.com now has 1,080,000 complaint letters submitted since 6 February 2024, when its founder and executive chair Martin Lewis launched the moneysavingexpert.com/carfinance tool. That equates to a staggering 30,000 per day. A back-of-the-envelope calculation means this could be at least £480,000,000 back (1) for those consumers, or more, as over 25% of complaints are from people with multiple agreements.

MSE’s five car finance commission mis-selling need-to-knows

1.             This is for those who bought a car, van, campervan or motorbike on PCP or Hire Purchase deals (not leasing) for primarily personal use between April 2007 and 28 January 2021.

2.             Lenders said brokers and car dealers had discretion to push the interest rates higher, and the more they did that, the more commission they’d receive. These were called discretionary commission arrangements (DCAs) and customers were rarely told about them. Around 40% of these car finance deals had DCAs, meaning millions overpaid without knowing. So without checking, people won’t know if it happened to them.

3.             In January 2021, the Financial Conduct Authority (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.

4.             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, urges people to log a complaint as soon as possible, to avoid the risk of being timed out.

5.             There is no need to use a no-win, no-fee claims firm. With the totally free MSE tool, found at moneysavingexpert.com/carfinance, 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.

Breakdown of biggest lenders complained to via MoneySavingExpert’s car finance tool

Martin Lewis, founder of MoneySavingExpert.com, says: “The numbers of complaints in not much more than a month is staggering – off the charts – far more than I expected. So, it’s not surprising that some firms are struggling to respond to complaints in a decent time. To frustrated complainers, I’d say for now we should be prepared to give companies some wriggle room on timings, but firms need to urgently step up their complaint handling resources.

“And this is just the beginning. Even though we were at the vanguard of PPI and bank charge reclaiming, in terms of numbers of complaints, this feels like it is building up even more quickly. In value terms, car finance mis-selling is potentially going to be the second biggest reclaim payout in UK history – possibly over £10bn repaid – which could even provide a fillip to the economy as PPI did.

“Lloyds has already put aside a provision of £450,000,000 towards potential costs and payouts for this. A strong indication that it thinks it, and by inference others, will probably need to pay back money due to DCA mis-selling. Though of course, we won’t know until the FCA’s ruling due in September. 

“And it’s because we don’t know what the FCA will say in September that eligible people should look at logging a complaint sooner not later – as the unknown means there’s the risk people may be ineligible if they wait to claim. The regulator’s own website information indicates timing may be an issue and says ‘so, if you think you could be running out of time, you should consider complaining to your provider now’.”

See MSE’s full guide for how the tool works and the next steps for those who’ve used it.

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Notes to editors

1.             The FCA estimates 40% of car finance deals had a DCA, and estimates the average amount overpaid to be £1,100. If it ordered all that to be paid back, following the precedent the ombudsman set, and 40% of those who complained had a DCA, that would be just under £500m.

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