Martin Lewis car finance alert: Expert breaks down how drivers could claim up to £950 after mis-selling scandal
Millions of drivers across the UK could be owed compensation after being unknowingly charged excessive interest on their car finance deals, and Martin Lewis is urging them to act now.
The financial guru has shed light on what happens next in the car finance mis-selling scandal, as the Financial Conduct Authority (FCA) begins consultation on a sweeping redress scheme that could see up to £18 billion paid out across the industry.
The FCA believes many customers could be entitled to payouts reaching up to £950 each. Though not every claim will be successful, Martin Lewis says there’s a “very high likelihood” that hundreds of pounds are coming to a large chunk of affected drivers.
Could you be owed money?
According to Mr Lewis, the scandal involves two separate strands of mis-selling. The most widespread involves Discretionary Commission Arrangements (DCAs). These schemes allowed brokers or dealers to inflate interest rates to increase their own commission, without ever informing the customer.
“It is when you went to a car broker or dealer and it increased the amount of interest that you were charged to increase the amount of commission without telling you,” said Lewis.
While a recent Supreme Court ruling blocked compensation for certain types of commissions, it didn’t touch the DCA cases, and that’s where the bulk of compensation is expected to come from.
DCAs were banned in January 2021, so if you took out a Personal Contract Purchase (PCP) or Hire Purchase (HP) deal before then, you may be in line for a refund.
“The one most people have complained about wasn’t involved in the Supreme Court decision, although it was on hold just in case anything in that decision caused a wobbler for DCAs,” Lewis clarified.
On the other hand, some cases covered by the court ruling involve commissions that were deemed “manifestly unfair.” These are trickier to prove and handled on a case-by-case basis, often involving vulnerable individuals or excessive interest charges.
What should drivers do now?
Simple: complain. Martin Lewis is encouraging anyone unsure about their deal to lodge a formal complaint, especially to identify whether a DCA was involved.
“If you’re one of those people who have already had a letter saying that your car finance firm, after you complained, won’t deal with it until December this year, that will almost certainly be delayed until next year,” he warned.
The FCA is urging consumers to act promptly, even before the final compensation rules are confirmed. Importantly, Lewis has a stern message about steering clear of claims management firms (CMCs) or legal companies, warning they could take up to 30% of any payout, even though the process is expected to be straightforward.
Instead, Martin’s own site, MoneySavingExpert, provides a free complaint tool to help you submit a claim directly to the lender.
Need insurance for just a short time?
If you’re sorting out your car finances or planning to switch vehicles soon, you might need a stop-gap insurance option. There’s a useful piece explaining how temporary car insurance works for short trips, emergencies, or borrowing a vehicle. It breaks down when this flexible cover can actually save you money compared to long-term policies.
How much money might you get back?
Here’s what we know so far:
- Most people will receive less than £950 per agreement
- DCAs could lead to payouts covering the excess interest charged
- An additional 3% simple interest per year will likely be added to the total
“The very high likelihood is that many people who had a discretionary commission arrangement where they were charged more interest than they should have been will get back a chunk of that in the hundreds of pounds at some point in 2026,” Lewis stated.
However, he warned that financial institutions are unlikely to give up without a fight.
“The industry could fight this hard,” he said, before urging car finance providers to accept what he called a “fair compromise.”
This is a landmark moment in the UK’s financial justice space. With billions potentially on the line, consumers need to stay informed, act swiftly, and avoid third-party claim firms that charge hefty fees.
If you suspect your car finance deal was affected, don’t wait. A few minutes could result in a sizeable cheque landing in your letterbox by 2026.
