Martin Lewis informed viewers that all drivers who purchased a vehicle on finance could be eligible for an average payout of £1,100 if an ongoing investigation finds in their favour. The Financial Conduct Authority (FCA) is currently investigating the practice of lenders allowing car dealers or loan arrangers to modify interest rates offered to customers for car financing.

This was known as a discretionary charge arrangement (DCA) and may have been applied to a person’s loan without their knowledge. The FCA banned this in 2021, but since then there have been numerous complaints from customers about the charges they incurred before the ban.

Most of these have been rejected by brokers, primarily car dealers, but the FCA inquiry, due to report in May 2025, will determine whether this is correct. Mr Lewis clarified: “It was about discretionary commission arrangements. That’s what lenders told car dealers and brokers. You can make it up interestand if you push it higher, we’ll give you more commission.”

“And this was done without informing consumers. So it was hidden. They were not aware of it. And up to 40% of car finance deals in the period we’re discussing had this discretionary fee arrangement. thousands back ” “Well, the average payout, if it happens, and it’s not certain to happen, would be £1100. This is for personal vehicles, cars, vans, motorcycles and static caravans.”

Renowned finance guru Martin Lewis pointed out that people could be eligible for potential claims if they purchased vehicles using personal contract plans or hire purchase but not hire agreements, and this applies to transactions between April 2007 and 28 January 2021. This period is significant as it was when the Financial Conduct Authority (FCA) put an end to discretionary fee models, commonly referred to as DCA.

The absence of the DCA listing implies that customers must be proactive in querying their arrangements. Mr Lewis advised: “So you have to put in a claim and say ‘did I have a DCA? And if I did, I want to make a formal complaint.” Now, while nothing will happen until May when the FCA reports you should register a complaint as soon as possible if there is a time frame later.”

He insists on the urgency, stating: “So the sooner you get the complaint the better, in case it doesn’t ban you because we have so much uncertainty.”

Mr. Lewis assures that there are no-cost alternatives for “no win no fee” lawyers, such as free tools available online – a sentiment echoed by the more than 2.4 million people who have successfully used the tool on the Money website Saving Expert.

Mr. Lewis notes the Court of Appeal’s position that car firms cannot earn commissions without obtaining the customer’s fully informed consent. Detailing the implications, he says: “To obtain fully informed consent, the client must know all the facts, including the amount of the commission, which was never told. This is a clearly radical point of view. Increases the likelihood of car financing mistakes. the sale of compensation through the FCA next May, as the FC has been delayed by these lawsuits to see what has been said.”

The court’s latest ruling empowered consumers and strengthened the regulators’ position against potential challenges, as one expert elucidated: “And now they’ve ruled in a pro-consumer way. It strengthens the regulator’s hand that if it rules in a pro-consumer way then it is less likely to be successfully challenged in court in a judicial review because the courts have already expressed a view subject to address the court.”

He praised the decision as “seismic,” noting its impact on all credit bureaus.

For more details about FCA investigation click here.

To use Money Saving Expert car financing reclaim tool click here.