All mis-sold commission complaints could be investigated

A ground-breaking update in the ongoing car finance mis-selling scandal suggests that millions more people could now be eligible for compensation. According to MoneySavingExpert.com founder Martin Lewis, this development could significantly expand the scope of the Financial Conduct Authority’s (FCA) investigation, potentially doubling the number of individuals entitled to payouts.

Here’s what we know so far, including Martin Lewis’s expert insights and a timeline of the investigation’s progress.

Martin Lewis: “This Could Double the Number of Payouts”

In his immediate reaction to the FCA’s announcement, Martin Lewis emphasized the monumental shift this update signals:

• Broader Complaints Scope:
  Previously, the investigation focused on Discretionary Commission Arrangements (DCAs), where dealers could increase interest rates to earn higher commissions without disclosing this to customers. The FCA has now confirmed the scope will expand to include all types of commissions, including fixed commission agreements where dealers earned a set amount per deal.
• Potential Scale of the Scandal:
  This change could impact nearly every car finance deal. Many customers were unaware of any commission being paid to their dealers, a lack of transparency that the Court of Appeal ruled is unlawful.
• Urgent Action Required:
  The FCA has advised consumers to lodge complaints sooner rather than later to avoid missing out due to time-bar restrictions. Martin Lewis and the MoneySavingExpert team plan to update their free complaints tool, which has already processed 2.5 million claims, to assist this new wave of eligible consumers.

Martin noted that while this update is transformative, the final outcomes for consumers with fixed commission agreements will largely depend on whether the Supreme Court upholds the Court of Appeal ruling.

Will This Make Car Finance More Expensive in the Future?

In a follow-up post, Martin Lewis expressed caution about the broader implications of this expanded investigation:

• Consumer Risks:
  Martin questioned whether refunds for fixed commission agreements—where dealers followed existing regulations—would be justified. He argued that redress should focus on cases where commissions were hidden or excessively high. Expanding refunds to every commission-based deal could strain the consumer lending market, potentially leading to less availability of credit and higher costs.
• Potential for Long-Term Harm:
  While transparency is critical, Martin warned that overcompensation could be counterproductive. The scale of these payouts may threaten the financial stability of car finance providers, ultimately impacting consumers.

Timeline of the Car Finance Investigation

• January 2024:
  The FCA launches an investigation into hidden Discretionary Commission Arrangements (DCAs).
• September 2024:
  The FCA delays the announcement of its findings to May 2025, citing complexities uncovered during the investigation.
• October 2024:
  A Court of Appeal ruling broadens the scope of the investigation, stating that car finance firms must have a customer’s “fully informed consent” to receive any commission.
• November 2024:
  The FCA announces plans to extend complaint deadlines and urges all consumers—whether affected by DCAs or fixed commission deals—to submit claims.

What Should Consumers Do Now?

The FCA is expected to formalize its proposals within weeks, but in the meantime, affected consumers are encouraged to:

• Submit Complaints Early: Use tools like MoneySavingExpert’s free complaints service to ensure your claim is registered before potential time limits.
• Monitor Developments: Follow updates on the FCA’s investigation and the pending Supreme Court ruling.

The expansion of this investigation signals a potential turning point in consumer rights for car finance agreements. However, as Martin Lewis cautions, the path to resolution will require careful consideration to ensure fairness for consumers and sustainability for the industry.

For full details, visit Martin Lewis’s original post on MoneySavingExpert.com: Martin Lewis: Huge car finance mis-selling update.