Martin Lewis urges drivers to act now as £950 payouts scheme launches

Money Saving Expert founder Martin Lewis is urging drivers to act now to help secure a slice of £18Bn of compensation. The Financial Conduct Authority has tonight (Sunday, August 3) announced its official redress scheme for drivers missold car loans to seek compensation, following the Supreme Court ruling on Friday. It means motor finance customers could receive a payout after the FCA announced it will consult on an industry-wide compensation scheme.

The final total cost of any compensation scheme is estimated to be between £9billion and £18billion, the FCA says, which it estimates means most individuals will probably receive £950 in compensation or less. The compensation is because many motor finance firms were not complying with rules or the law by not providing customers with relevant information about commission paid by lenders to the car dealers who sold the loans, the FCA said.

It comes after Friday's ruling by the Supreme Court on cases in which the FCA had intervened.

While some motor finance customers will not get compensation because in many cases commission payments were legal, the court ruled that in certain circumstances the failure to properly disclose commission arrangements could be unfair and therefore unlawful, the FCA added.

Now Martin Lewis has issued advice to drivers about what they should do right now.

He told his followers on Twitter on Sunday night: "Should you put a car finance complaint in now on the back of the regulator's new consultation? (No need to do anything if you've already complained)."

He then quoted the FCA which said: "Our advice remains that consumers concerned that they were not told about commission and who think they may have paid too much for the finance, should complain now.

"We aim to make any scheme easy to participate in, without needing to use a claims management company (CMC) or law firm. Using a CMC or law firm may end up costing them up to 30% in fees of any compensation they receive."

Martincontinued to add that there is "no harm" in taking action now and putting in a complaint if you haven't already over Discretionary Commission Arrangements.

He said: "My view on the back of this is there's no harm in putting a DIY complaint now to see if you had a Discretionary Commission Arrangement (free tool to do it here https://moneysavingexpert.com/reclaim/reclaim-car-finance/ ) and it could be particularly beneficial in old cases where you have the detail of your car finance, but the car finance firm may have deleted it, as that way you put a marker in that you want your case looked at.

"Though in newer cases, it's more that many want to know now whether you're likely due compensation or not, but if you don't want to hassle, you likely wouldn't lose out by not putting one in."