Motorists who purchased a new car between 2007 and 2021 may be able to claim “billions” in compensation as a result of a Financial Conduct Authority (FCA) investigation highlighted by Martin Lewis.
The Money Saving Expert raised awareness of the inquiry on his BBC Martin Lewis podcast and on the social media site X earlier this month.
He claimed “millions” who purchased a car under a PCP or finance agreement could be affected.
He also admitted car finance payouts could be on PPI levels once the FCA has concluded their probe.
The watchdog has since revealed deals agreed between 2007 and 2021 will be looked into.
It has led financial experts to increase the total cost of the bill with lenders likely to be forced to cough up much more.
According to the Financial Times, analysts at Jefferies feel total costs for the industry could reach around £13billion.
This is higher than previous estimates which put total payouts nearer £4billion.
Martin Lewis has promised to update followers with more information “in 10 days” as he works on crushing the most accurate information.
However, he revealed the scale of the programme last week as he admitted a “back of the envelope” calculation would see tens of billions of pounds handed back to road users.
Explaining the situation, he told the BBC: “What was happening at that point is the lenders who organised the finance were saying to the car dealers ‘the commission is discretionary’.
“In other words, if you want more commission on these finance products – which is why they were being more heavily sold – you can simply increase the cost of the finance and you will get more commission.
“Many of them did so and it wasn’t declared so the consumer was not aware quite what enormous sums were being paid in commission to car dealers for this type of finance.”
The FCA decided to look into the problems after a “high number of complaints” to motor finance companies around compensation for commission arrangements.
Firms have rejected most of the complaints because they feel they have not acted unfairly or caused loss for their customers.
However, the Financial Ombudsman Service found in favour of motorists in two recent cases which the FCA feels is likely to lead to a “significant increase” in further complaints.
