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EXTRA TIME
Car finance scandal claim deadline EXTENDED until next year – check if you are owed thousands now
The report has been delayed after lenders "struggled to supply the data" needed
THE deadline to claim compensation over dodgy car finance deals has been extended into next year.
The Financial Conduct Authority (FCA) is carrying out an investigation into shady sales practices which saw millions of Brits potentially overpaying on their motors.
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The probe was set to conclude in September of this year, but the watchdog has now announced that it won't finalise its report until May 2025.
When the investigation began, the FCA suspended the requirement for lenders to issue a final response to a complaint within eight weeks until after its conclusions were released.
Given the setback, this means that lenders will now not have to issue a final response to complaints until December 4 2025 "at the earliest".
According to the FCA, the delay has been in large part due to the fact that lenders have "struggled to supply the data we need within the requested time".
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This, combined with a pending court case reviewing a particular complaint, has left investigators unable to complete their work by the initial deadline.
What is the FCA investigating and who is eligible for compensation?
What is being investigated?
The FCA announced in January that it would investigate allegations of "widespread misconduct" related to discretionary commission agreements (DCAs) on car loans.
When you buy a car on finance, you are effectively loaned the value of the car while you pay it off.
These loans have interest payments charged on top of them and are often organised on behalf of lenders by brokers - usually the finance arm of a dealership.
These brokers earn money in the form of commission - a percentage of the interest payments on the loan.
DCAs allowed brokers to, to a certain extent, increase the interest rate on a loan, which in turn increased the amount of commission they received.
The practice was banned by the FCA in 2021.
Who is eligible for compensation?
The FCA estimates that around 40% of car deals may have been affected before 2021.
There are two criteria you must meet to have a chance at receiving compensation.
First, you must be complaining in relation to a finance deal on a motor vehicle (including cars, vans, motorbikes and motorhomes) that was agreed before January 28 2021.
Second, you must have bought the vehicle through a mechanism like Personal Contract Purchase (PCP) or Hire Purchase (HP), which make up the majority of finance deals and mean you own the vehicle at the end of the agreement.
Drivers who leased a car through something like a Personal Contract Hire, where you give the car back at the end of the lease, are not eligible.
You can check whether you might be owed money and submit a complaint using Martin Lewis' free tool here.
However, it does also mean that motorists have more time to submit complaints, with the deadline to appeal your lender's response through the Financial Ombudsman set back.
Brits will now be able to take their case to the Ombudsman until July 29 2026 or up to 15 months after their final response is dated, whichever comes later.
Although, the FCA does emphasise that the initial complaint will still need to be made within six years of the finance deal occurring or within three years of when you would reasonably become aware that you had grounds to complain.
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The body is expected to announce a sizeable compensation package at the end of the investigation, with affected drivers potentially due "billions" in compensation.
Announcing the delay, the FCA said: "We're proposing to extend the current pause to the time firms have to respond to consumers about motor finance complaints involving a discretionary commission arrangement.
Martin Lewis On Car Finance Scandal
"We now intend to set out next steps in our review into the past use of DCAs in May 2025.
"Firms involved in our review have engaged with us constructively, but many have struggled to supply the data we need within the requested time.
"While we now have the necessary data, the delays mean we will not be able to set out next steps by the end of September 2024 as expected.
"Our next steps could involve consulting on a redress scheme."
It comes after anonymous industry insiders exclusively revealed to SunMotors that "ridiculous" rip-off DCAs were "encouraged" by loan brokers to line their own pockets.
It's the next PPI
Coby Benson
One witness, known as Employee S, claimed: "As long as customers could afford the monthly payments, we could change the rate to maximise our commission.
"There was a lot of pressure to get the most out of each deal as we were targeted on monthly income which should have been around £20,000 per employee per month.
"If the deal was going to be lost, we would reduce it, either way, the company got the business.
"We knew full well what we were doing, and the practice was encouraged by the firm."
Expert lawyer Coby Benson, from Bott & Co, told The Sun that Brits could be due "billions" in compensation, dubbing the scandal the "next PPI".
In an exclusive interview, he said: "If there was a decision to pay people out automatically for this then the scale would be enormous.
"Like only surpassed by PPI, in which tens of billions were recovered.
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"Probably approaching 10 million people could have been affected by this misselling scandal.
"The safest thing people can do is to get their complaint early."