New Martin Lewis £1,100 car finance refund update ahead of compensation decision due in September

The Martin Lewis Money Show Live returned to the small screen on Tuesday for a one-off special covering a whole host of topics including boosting State Pensions, making the most of your cash on holiday and energy fixes. However, the consumer champion kicked the hour-long ITV programme off with an update for everyone eagerly awaiting the outcome of an investigation into car finance compensation.

Earlier this year, Martin revealed that millions of people who bought a car, van, campervan or motorcycle on finance before January 28, 2021 may be owed thousands of pounds after being charged ‘hidden commission’.

He explained that drivers typically paid £1,100 more interest on a £10,000 four-year car finance deal when there was a discretionary commission arrangement – but added that the bigger the loan, the more money you could be owed. However, a decision by the Financial Conduct Authority (FCA) on whether or not compensation payouts could be due is not expected until September 25, 2024.

However, Lee contacted the show to say he sent off letters to car finance firms and has received a response confirming he overpaid on two of those. He asked the financial guru if he needs to do anything else, or sit tight and wait on the FCA outcome.

Martin told viewers that Lee has done everything he needs to do and just needs to wait until the FCA makes a decision on September 25.

He continued: “You’ve got your claim in, if the regulator – the FCA – rules that car firms have to pay out, they’re talking a typical payment of £1,100 per person, so yeah, you’ve done everything.”

He added that when the announcement is made he will tell everyone “exactly what to do on that day” to ensure they get the money they are owed.

But he also had a crucial update for anyone who has used the online template tool on MoneysavingExpert.com (MSE.com) to generate a complaints letter and is still waiting on a response.

He said that firms have been “snowed” with the volume of letters, but not to worry if you’ve not heard back yet. He also shared that he’s just conducted a survey of 11,000 people who have submitted the MSE.com template claims letter and is going through the results in order to put out detailed help on what to do firm-by-firm.

Martin plans to issue this on social media over the next few weeks. But he ended with a serious message for those who haven’t sent off a letter yet. He said: “The most important message I can give anyone watching is if you bought a car on PCP or hire purchase before January 2021 and you haven’t put a claim in now to find out if you have discretionary commission, the sooner you get it in, the less chance there is of you being timed out.

“There are free tools online, you don’t need to pay anybody to do it, so go and have a look at that if that’s ringing a bell.”

Full car finance refund guide on MSE.com

To help everyone who has already emailed their complaint, Martin and the team of experts have put together a complete next steps list.

This covers:

• What to do if you complained but had no response yet
• What to do if your complaint has been acknowledged, but no more information has been given
• What to do if you’ve had a response with options

The full guide, plus the template letter and an indication on when specific finance firms are likely to respond can be found on MSE.com here.

MSE.com’s five car finance commission mis-selling need-to-knows

1. This is for those who bought a car, van, campervan or motorbike on PCP or Higher Purchase deals (not leasing) for primarily personal use between April 2007 and 28 January 2021.
2. Lenders said brokers and car dealers had discretion to push the interest rates higher, and the more they did that, the more commission they’d receive. These were called discretionary commission arrangements (DCAs) and customers were rarely told about them. Around 40% of these car finance deals had DCAs, meaning millions overpaid without knowing. So without checking, people won’t know if it happened to them.
3. In January 2021, the FCA banned DCAs, and in January 2024, it launched a huge mis-selling investigation. The deadline for dealing with complaints has been extended until the FCA reports its findings on 25 September 2024.
4. Martin Lewis believes it is unlikely the FCA would’ve launched such a huge public investigation unless it had strong evidence of systemic mis-selling. Yet he says until the FCA reports its findings, nothing is certain – and as one big risk is that there is a time bar placed on complaints, urges people to log a complaint as soon as possible, to avoid the risk of being timed out.
5. There is no need to use a no-win, no-fee claims firm. With the totally free MSE tool, found here, you just answer a few questions on your car finance agreement (answers aren’t recorded, so as not to inadvertently data-mine) and then the tool builds an email to request information on whether you had a DCA, then logs a complaint.