Millions of Brits have already gone ahead and started to put in their claims as the big car finance scandal is slowly coming out into the open. Over two million people have already kicked off their claims through My Claim Group, a group that’s there to help folks figure out if they’re owed some money. This year, drivers might just be in for a big payday that could go into the thousands. Why? Well, it turns out there’s been a bit of a car finance mis-selling scandal going on that’s been compared to that whole Payment Protection Insurance (PPI) mess. Turns out, lots of drivers are only now realizing they’ve been dishing out more cash than they really needed to for years. Sneaky, right?
So, what’s the deal with this scandal, you might be wondering? Well, it all comes down to these sneaky little undisclosed and sometimes “secret” commissions that car dealerships have been pocketing from lenders. These commissions have led to customers unknowingly signing up for finance deals with interest rates that are way higher than they should be. Not cool, right? But hey, that’s where My Claim Group steps in to help those who have been affected or think they might have been, to get back the money they’ve lost. So, if you’re curious about how much cash you might be owed, My Claim Group is the place to go.
Now, here’s the juicy part. Nearly half of all those Hire Purchase (HP) and Personal Contract Purchase (PCP) contracts made between 2007 and 2021 could have these hidden commissions in them. That means a whole bunch of consumers could have been overpaying and are now eligible for some compensation. From the 1.2 million claims already processed, the average amount recovered per claim is sitting at around £4,000. Not too shabby, right?
Alright, so when did all this craziness start? Well, before 2021, a lot of those car finance deals were set up with these “discretionary commission arrangements.” Basically, this gave dealerships the power to decide on the interest rates for the finance offers they were giving out. The higher the interest rate, the fatter the commission for them. Sounds like a pretty sweet deal, right? Well, not really if you’re the one getting stuck with the bill. These arrangements led to dealerships pushing those high-interest loans onto consumers, all for the sake of lining their own pockets. And surprise, surprise, a lot of folks had no idea about these sneaky deals. But hey, the Financial Conduct Authority (FCA) put a stop to that in 2021 to make things more transparent and protect consumers. Better late than never, right?
But wait, there’s more. Turns out, a bunch of these shady practices go way back to 2007, leading to a big reevaluation of past lending activities. Fast forward to October 2024, and the Court of Appeal drops a bombshell by ruling that hiding commissions on car loans is a big no-no. This opened the floodgates for more mis-selling claims, setting a precedent for consumer compensation. And boy, did the floodgates open! The Financial Ombudsman Service recorded a whopping 18,658 new car finance cases in the last quarter of 2024. Talk about a mess, right?
So, how big of a mess are we talking about here? Well, let’s just say the lenders are feeling the heat. Lloyds Banking Group bumped up their provision for potential compensation payouts to a whopping £1.1 billion after that Court of Appeal ruling. Analysts are even predicting that Lloyds could be looking at a total hit of over £4 billion. Other big players like Santander UK, Close Brothers, and Barclays are also facing some serious liabilities, with estimates suggesting that total compensation costs could soar up to £30 billion. Ouch.
So, what’s happening now? Well, the government is stepping in to try and sort this whole mess out. UK Chancellor Rachel Reeves jumped into the Supreme Court case in January 2025 to protect lenders from those multibillion-pound payouts. But hey, claims management firms like My Claim Group are still urging folks to speak up and lodge complaints. The Supreme Court is currently mulling over a crucial appeal by car loan providers, and the Financial Conduct Authority (FCA) has put a hold on complaints until the court makes its decision later this year. The ball’s in the court of the lenders now.
If you think you might have gotten caught up in this whole mess, head on over to the My Claim Group website to get the scoop and start the process of figuring out if you’re due a refund. Who knows, you might just be in for a nice little surprise.
