Millions of us could have been taken for a ride when financing our cars—and now, we might be in for a hefty payout
If we took out a car finance deal before January 2021, there’s a chance we were unknowingly overcharged due to hidden commission fees. Now, the Financial Conduct Authority (FCA) is cracking down, and lenders may have to cough up between £6 billion and £16 billion in refunds.
Were We Mis-Sold Car Finance?
Here’s the deal: some car dealers and finance companies pocketed secret commissions when setting up our agreements, often hiking up our interest rates in the process.
They did this through ‘discretionary commission arrangements’ with brokers — all to boost their profits. But they never told us about it.
The FCA has since outlawed this practice but if we bought a vehicle from a broker with one of these arrangements before January 2021, there’s a good chance we were overcharged.
How Much Could We Get Back?
The average refund is expected to be around £1,100, but some of us could be due thousands, depending on how much interest we were overcharged.
Even banks and lenders are preparing for massive payouts—Close Brothers has already set aside £165 million, and Santander is reviewing past deals to see how many drivers were affected. The FCA is still investigating but plans to announce its findings and next steps in May 2025.
How to Check If We’re Owed Money
If we think we were mis-sold, here’s what we need to do:
- Find Our Finance Agreement – If we financed a car before January 2021, we need to check our paperwork for any mention of a commission.
- Complain to Our Lender – MSE recommends writing to the finance provider and stating that we believe we were mis-sold due to undisclosed commissions.
- Escalate If Necessary – If our lender refuses to refund us, we can take our case to the Financial Ombudsman Service for free.
With billions of pounds potentially up for grabs, now’s the time to check if we’re owed a refund. We can use the MSE Free car finance reclaim tool for a more in-depth guide on how to act.
We wouldn’t ignore free cash, so why let lenders get away with overcharging us? It’s time to take back what’s rightfully ours!
Image: SaiArLawKa2 / Shutterstock
