The Financial Conduct Authority (FCA) has encouraged angry motorists affected by car finance commission deals to file a complaint immediately.
The FCA has extended the complaints process from six months to 15 months as it opens a widespread investigation into motor finance firms.
Martin Lewis has raised awareness of the probe on his BBC podcast and social media site X last week.
The money guru warned “millions” of motorists who purchased vehicles before January 2021 could be liable for payouts in a scheme which could reach PPI levels.
The FCA is investigating for “widespread misconduct” in the motor finance market with affected motorists likely to “receive an appropriate settlement”.
The FCA explained: “If you’re unhappy with a response you’ve had from your provider to this type of complaint, we’re giving you longer to take your complaint to the Financial Ombudsman Service.
“Usually, you have to take your complaint to the Financial Ombudsman within six months of getting a final response from your provider, but we’re extending this by up to 15 months if you were sent a final response between July 12, 2023, and November 20, 2024.”
The FCA will freeze the eight-week deadline for providers to submit a response to customer complaints while the examination is ongoing.
The study was launched after the FCA revealed there had been a “high number of complaints to motor finance firms”.
The Financial Ombudsman Service also found in favour of complainants in two recent decisions which could prompt a “significant increase” in further cases.
They explained: “We’re examining the issue to make sure that, if you’re owed compensation, you get it in the best way possible. In the meantime, we’re pausing the eight-week deadline for providers to respond to complaints about car finance involving this type of commission.
“You can still complain to your provider, but they will not have to respond to your complaint until after September 25, 2024, at the earliest.
“It’s important that any complaints are dealt with by providers in a consistent, efficient and orderly way. Given the high number of possible complaints, there’s a risk this might not happen.”
Martin warned that a quick destination was that “billions” of pounds could be handed back to road users across the country. However, he stressed only those who purchased a car or van on a PCP or finance deal before January 28, 2021, would be affected.
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.”
