Finance expert Martin Lewis has offered an update to possibly millions of Britons who might be due a payout exceeding £1,000. The money-saving guru hinted that further details may emerge in the next few months.
Many UK residents who took out car finance before 2021 could be poised for a substantial reimbursement averaging £1,100 if it is ruled by the Supreme Court that concealed commissions by companies have caused customers financial detriment. After an earlier ruling by the Court of Appeal, the case was escalated to the highest court in April.
Pioneering consumer advocate Martin Lewis and his MoneySavingExpert team highlighted investigations last year by the Financial Conduct Authority (FCA) into past engagements with motor finance Discretionary Commission Arrangements (DCAs).
Martin aired his comments via social media on Monday, noting that while there’s no fresh verdict yet, there’s a general anticipation that a decision could be delivered as soon as July.
On X – previously known as Twitter – he shared a message stating: “What’s happening with car finance reclaiming? I’m being asked this a lot. No update I’m afraid, the Supreme Court case has been heard and everything is now waiting for its decision. There is no way to know when that’ll happen but many I speak to have a working assumption it’ll be July.”
As reported by the Daily Record, Martin has estimated that approximately 40 per cent of all car finance deals signed from April 2007 to January 28, 2021, could warrant an average compensation of about £1,100.
This prospective payout includes those who utilised finance options contaminated with ‘hidden DCA charge’ to purchase vehicles such as vans, campervans, or motorcycles during the specified period.
Currently, the FCA is refraining from making any comments until the Supreme Court’s decision is announced.
In March, the FCA revealed its plans to consider an “industry-wide redress scheme” within six weeks following the Supreme Court’s judgement.
At that time, the Authority stated: “We are currently reviewing the past use of motor finance Discretionary Commission Arrangements (DCAs). We’re seeking to understand if firms failed to comply with requirements relating to DCAs and if consumers lost out as a result. If they have, we want to make sure consumers are appropriately compensated in an orderly, consistent and efficient way.”
The regulator further explained that their review began last year after a ruling by the Court of Appeal, which “raised the possibility of widespread liability among motor finance firms wherever commissions were not properly disclosed to customers”.
Moving forward, the FCA has disclosed: “The Supreme Court will hear an appeal against the Court of Appeal’s judgment on 1 to 3 April. We have been granted permission to intervene in the case and have filed our submission with the Court.”
In a bid to ensure clarity for all involved, the FCA declared: “We want to provide as much certainty as possible to firms, consumers and stakeholders. So, we are confirming that if, taking into account the Supreme Court’s decision, we conclude motor finance customers have lost out from widespread failings by firms, then it’s likely we will consult on an industry-wide redress scheme.”
The authority previously recognised the increased possibility of adopting an alternative process for handling complaints since initiating their review.
Per the FCA’s statement, the suggested compensation scheme would place responsibility on companies to identify whether clients were detrimentally affected due to their shortcomings. Subsequently, these businesses would be compelled to dispense appropriate reparation, while the regulatory body establishes necessary parameters and controls to ensure adherence.
The FCA further detailed: “A redress scheme would be simpler for consumers than bringing a complaint. We would expect fewer consumers to rely on a claims management company, meaning they would keep all of any compensation they receive. It would also be more orderly and efficient for firms than a complaint-led approach, contributing to a well-functioning market in the future.”
