Martin Lewis issues ‘huge’ car finance scandal update which could hand drivers £1,400

​

Martin Lewis has issued “huge” car finance news after a major update in the scandal. The BBC and ITV star says the regulator has just put out a statement saying it will consult on “an industry-wide redress scheme.”

Mr Lewis explained: “Now, ‘consult’ is mostly technical, this really means its made up its mind. I’ve bashed out at top speed an explanation. It plans a section 404 redress scheme that will require lenders to proactively contact all borrowers who met the miss-selling criteria and offer them a fixed redress based on FCA rules.

“Therefore, people won’t need to complain, they will be paid out an amount dictated by the FCA to firms based on their situation. This likely stretches the net of who’ll be paid far wider (and means there’s no need to use claims firms).”

READ MORE All the changes coming to PIP under benefits cuts – from eligibility to assessments

He explained there are two main types of Car finance miss-selling being looked at: Discretionary Commission Arrangement (DCA) and Commission Disclosure complaints. The 52-year-old said: “The redress paid out will depend on the Supreme Court decision…”

He added his guess was around £1,400 per arrangement. The FCA said in a statement: “We are no longer planning a further announcement in May. Instead, we will confirm within 6 weeks of the Supreme Court’s decision if we are proposing a redress scheme and if so, how we will take it forward.

“The Court of Appeal case involved complaints about discretionary and non-discretionary commission arrangements (non-DCAs). Our next steps on non-DCA complaints will also be informed by the outcome of the Supreme Court case.”

The Supreme Court is now scheduled to hear an appeal between April 1-3 regarding a landmark Court of Appeal ruling from October 2024. This ruling declared it unlawful for car dealers, acting as brokers, to receive commission from lenders without the fully informed consent of the customer.

According to the financial regulator, on a typical £10,000 motor finance agreement, discretionary commission arrangements could have caused customers to pay an additional £1,100 in interest over a four-year term.