The Financial Conduct Authority (FCA) has calculated that millions of motorists who were mis-sold auto finance could be in line for payouts worth up to £18bn. But lenders have hit back, saying the regulator’s multibillion-pound estimate is vastly overblown. The FCA’s estimate has thrown car finance claims back into the spotlight, with a fresh focus on historic lending practices and what it means for lenders and consumers.

Regulator signals that drivers mis-sold car finance may be eligible for compensation reaching £18bn [1].

The FCA’s warning comes after the UK’s highest court said a “large majority” of car finance deals may have caused an “unfair relationship” between borrowers and lenders [2]. It is based on an analysis of personal contract plan (PCP) and other deals sold from 2007 to 2021.

Legal experts have suggested that “tens of millions” of drivers could be affected, with compensation payouts of up to £950 per mis-sold agreement on average [3]. Consequently, there has been a significant increase in car finance mis-selling claims from consumers wanting to claim compensation for the agreements they were mis-sold.

The Supreme Court has recently ruled that as many as 14 million people were mis-sold car finance between 2007 and 2021. The central issue that the ruling needed to determine was whether the overall terms of the agreement created an “unfair relationship” between the lender and borrower under the Consumer Credit Act. The FCA has an open consultation, likely to start in October, to consider the best route to redress [4]. The FCA expects to pay compensation to millions of mis-sold car finance customers next year.

Analysts note that only 23% of people trust lenders to handle payouts fairly, and some lenders have already flagged missing or deleted records. With 57% of potential claimants having moved house since their finance deal and over 8 million losing paperwork, the need for clear guidance and support has never been greater.

For those wondering what happens if a company ignores the ombudsman after a ruling, finance claims experts advise that individual consumers may struggle to recover compensation without professional assistance. It’s another reason why it’s so important to keep up to date with the latest news with car finance claims UK. More and more drivers are using these kinds of services to help them with complex paperwork and to make sure they get a fair deal. Remember, this average amount of redress per agreement is a lot of money which could go towards overpayments you’ve made in the past.

Claiming back PCP & other finance agreements with specialist assistance

The intricate nature of the FCA’s guidance as well as the Supreme Court ruling has seen consumers turn to specialist finance claims experts for help and support. PCP and other car finance agreements may contain small print that is hard to decipher and missing paperwork could result in delays or denial of compensation. Engaging a professional claims service can simplify the process.

Experts recommend reviewing all past agreements and identifying the correct lender, particularly if documents have been lost or addresses changed. Redress schemes may take time, and for many, the process is smoother with professional oversight. For guidance on navigating claims efficiently, consider reviewing a claims management company that is FCA-authorised and experienced in handling PCP claims.

Considering the services of a claims management company

For individuals unsure of their lender, missing paperwork, or simply seeking a reliable advocate, services like Reclaim247 can provide crucial support. The process is straightforward: all that is required is your name, address, and date of birth. There is no need for car registration details or paperwork, and claims are handled on a no-win, no-fee basis by FCA-authorised solicitors.

One question many drivers ask is how long does Reclaim247 take to process claims and although this will vary according to personal circumstances, the company works as quickly as possible to ensure the client receives the best possible compensation. If you have been affected by the car finance scandal it is important to get the right support as consumers should not be left alone to navigate the evolving redress process.

Conclusion

The FCA’s projected payouts for mis-sold car finance agreements have sparked a surge in car finance claims, highlighting the importance of understanding rights under the Consumer Credit Act. The Supreme Court decision and forthcoming FCA consultation add yet more weight to the need to act quickly and with expert guidance.

Consumers can either seek professional advice or submit their car finance refund and redress claims through a claims management company, such as Reclaim247, in a timely manner. The secret to a successful claim is to be timely and take action. Don’t let an opportunity for redress pass you by.

For more information on how to start your car finance mis-selling claims, visit Reclaim247’s claims guide.

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References:

1. Regulator signals that drivers mis-sold car finance may be eligible for compensation reaching £18bn - https://www.ft.com/content/3d9af3d7-2af6-4a4e-8712-5998eea47828
2. UK’s highest court said a “large majority” of car finance deals may have caused an “unfair relationship” between borrowers and lenders  - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
3. compensation payouts of up to £950 per mis-sold agreement on average - https://www.birminghammail.co.uk/motoring/motoring-news/14-million-drivers-could-receive-32193839
4. The FCA has an open consultation, likely to end in October, to consider the best route to redress - https://www.fca.org.uk/news/press-releases/fca-consult-motor-finance-compensation-scheme
5. only 23% of people trust lenders to handle payouts fairly - https://www.slatergordon.co.uk/newsroom/consumers-trust-the-financial-conduct-authority-to-resolve-the-car-finance/