Car buyers may be ‘owed £1,000s’ if they used finance between 2007 and 2021, MSE claims

Money gurus at Martin Lewis’ MoneySavingExpert (MSE) have issued a warning to anyone who’s purchased a car, van, campervan or motorbike in the past 14 years

Experts at Martin Lewis’ MoneySavingExpert (MSE) have issued a fresh alert about ‘mis-sold’ car finance, claiming that vehicle owners may be owed more than £1,000. This primarily includes anyone who bought a car, van, campervan or motorbike between April 2007 and January 28, 2021.

The warning comes as the Financial Conduct Authority (FCA) launched an investigation into car financing earlier this year which is assessing whether customers have been charged too much interest on loans. Although its next update is due to be published in May 2025, vehicle owners can still make a complaint claim today – but they need to be quick.

“Our car finance reclaiming guide takes you through it step-by-step, but in a nutshell, you may be able to claim £1,000s back due to HIDDEN Discretionary Commission Arrangements (DCAs) on your policy,” MSE wrote. “These DCAs are where finance firms let car dealers pump up interest rates, without customers being told, and then bunged ’em extra commission if they did. This likely meant many OVERPAID WITHOUT KNOWING and may be due a predicted average £1,100 back.”

If you have no idea whether a DCA was in your policy, don’t panic. The complaints procedure only considers two types of finance taken over the 14-year period. This encompasses Personal Contract Purchase (PCP) and Hire Purchase (HP), but leasing is not included.

The experts stress that only vehicles used for personal use and commuting are part of this too, while business cars and static caravans are excluded. Claims can even be made on behalf of someone who passed away, or for a vehicle that’s no longer in your ownership.

If you think you tick these boxes, MSE then encourages you to use it simple online tool that formally asks your finance firm whether a policy implemented used a DCA. Providing the answer is yes, it’ll then automatically log a formal complaint.

Impressively, MSE claims that 74% of those who have previously used this tool have discovered they had a DCA. However, prospective complainants are advised to be quick.

When the update arrives in May 2025, MSE speculates that there may be a ‘time bar’ introduced, preventing some people from claiming back after a certain period. The FCA also explains: “Before January 2021, some lenders allowed brokers (the person who arranges your loan, for example, your car dealer) to adjust the interest rates they offered customers for car finance.

“The higher the interest rate, the more commission the broker received. This was known as a discretionary commission arrangement (DCA). And it may have been applied to your loan without you knowing.

“DCAs created an incentive for brokers to increase how much people were charged for their car loan. We banned this practice in 2021. But there have since been a high number of complaints from customers about how much they were charged before the ban. Providers are rejecting most of these complaints, because they believe they haven’t acted unfairly and haven’t caused customers to lose out.

“We’re reviewing the issue to make sure that, if you’re owed compensation, you get it in the best possible way.”

What do you think? Let us know in the comment section below

Join the Money Saving Club WhatsApp channel aimed at saving you money and powered by the best content from Reach’s national and regional titles