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Have You Been Affected by Car Finance?
Millions of UK drivers could be due redress as the watchdog—the Financial Conduct Authority—investigates the mis-selling in the car finance sector. Prior to January 2021, brokers were allowed to change interest rates, increasing their commissions at customers' great cost. Though this practice is now outlawed, many who bought cars on finance before it were barred might have charged excessively. The FCA is now investigating these historic cases to work out the scale of the problem.
If you bought a car on finance before January 2021, you may be affected. The FCA said until January 2021 some customers may have been charged too much because of "discretionary commission arrangements" between lenders and brokers. These arrangements allowed brokers to increase interest rates and collect higher commissions. Consequently, many potential customers have complained about the unreasonably high charges levied on them for their car finance deals before the ban, which only came into effect in January 2021. Over 10,000 have been made to the FOS, yet so far lenders and brokers have rejected the vast majority, saying they are dealing with customers fairly.
The probe was ordered by the FCA following an adverse ruling by the FOS against Barclays in January. It ruled that the bank made an unfair payment of commission to a credit broker. The bank is appealing this decision – brought a judicial review — in the courts. Meanwhile, Lloyds Banking Group has made provisions of £450 million for the review in its half-year results released yesterday, through its Black Horse finance arm. Estimates by analysts are that the total redress could reach as high as £2.5 billion for Lloyds, £1.1 billion Santander, £350 million for Barclays, and £250 million for Close Brothers.
Sound like you?
You could be affected if:
- You bought a car under a finance scheme (e.g., hire purchase or personal contract purchase) before 28 January 2021.
- There was a discretionary commission arrangement between your lender and broker.
- To find out if you are eligible, contact your broker or lender to inquire about their commission arrangements.
- The investigation does not cover car finance taken out on or after 28 January 2021, or hire agreements like Personal Contract Hire.
- If this sounds like you please do get in touch today, we are ready and waiting - Contact Us Here
