Consumer expert Sue Hayward’s savvy finance tips and advice WORDS: SUE HAYWARD WWW.SUEHAYWARDMEDIA.COM PICTURES: SHUTTERSTOCK
Sue’s Guide Car Finance Compensation
Millions of customers who took out motor finance before 2021 could be due compensation if it’s found they were overcharged on their loans.
The issue of overcharging is being investigated by the Financial Conduct Authority (FCA), which is the financial regulator. It comes after a whopping 10,000 complaints were made to the Financial Ombudsman Service – a free to use organisation that aims to resolve issues between financial organisations and customers.
The matter goes back a few years to car finance taken out before January 2021. The issue is that some finance brokers and dealers may have been overcharging to boost their commission. Previously, arrangements were in place between lenders and car dealers, known as ‘discretionary commission agreements’, which allowed brokers, including car dealers, to adjust interest rates to boost their commission. This meant customers paid more, but since 2021, these arrangements have been banned, saving customers around £165 million a year.
The FCA is carrying out an investigation – and if it finds there is a widespread problem, it could pave the way for compensation. If you had car finance prior to 2021 and think you could have been overcharged, it’s worth checking details of your finance agreement.
You should first make a complaint to your car finance company, and if you’re not happy with the response, contact the Financial Ombudsman Service. You can find out more at fca.org.uk/carfinance.
SUE’S TIPS:
◆ The FCA is investigating whether a compensation scheme is needed to address the issue and compensate customers who may have been overcharged.
◆ This applies to finance on both new and used cars.
◆ When making a complaint, keep a record of any email or paper correspondence.
3 WAYS TOSAVE
◆ Apply for a free Global Health Insurance card f
