Millions of drivers could be owed compensation in a landmark car finance case (Image: Catherine McQueen via Getty Images)
Millions of drivers across the country are on high alert as a significant development emerges regarding potential compensation.
The Financial Conduct Authority (FCA) has conducted an investigation concerning “discretionary commission agreements” (DCA), amid concerns customers were unwittingly shortchanged.
The watchdog initiated a sweeping probe last year to determine if consumers had been overcharged.
The controversial DCAs allegedly permitted brokers and dealerships to hike on car financing deals to earn increased commissions – a practice clamped down on in 2021.
But a recent Court of Appeal judgment has paved the way for more claimants – not solely those engaged in DCA contracts – to make a claim for reimbursement.
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Car finance lenders could face big payouts (Image: Getty)
According to the ruling, it’s mandatory for clients to be fully informed about any commission payments and consent to them.
Failure to do so and then pay commission to the dealer would be illegal.
Two banks entangled in the landmark dispute, Close Brothers and FirstRand Bank, have successfully sought the go-ahead to challenge a pivotal ruling at the Supreme Court, with the showdown set to span from April 1 to April 3.
The FCA disclosed on March 11 that it has made submissions for the Supreme Court’s consideration.
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The FCA has announced when it expects to give more information (Image: Getty)
It also doubled down on its commitment to potentially establish an arrangement for compensatory redress if motor finance clients are seen to be adversely affected, reports .
The FCA declared: “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).
How to check if you could be eligible for compensation
The consumer champion platform MoneySavingExpert.com, headed by Martin Lewis, has previously advised those who suspect they’ve been disadvantaged by the issue to lodge a complaint promptly.
This alert comes amid concerns that a retroactive deadline could potentially restrict claims.
Customers should contact the lenders responsible for the finance deal, rather than the intermediary brokers or the vehicle dealerships involved.
If you weren’t informed about commission and may have overpaid for your car finance, or if your car finance agreement included a DCA, you could be entitled to compensation.
MSE provides a to assist you in lodging a complaint. Car finance lenders are required to respond to complaints by December 4.