If you’ve entered into a car finance agreement between two specific dates, you might be in line for a hefty refund.
My Claim Group, an organisation assisting individuals who were unjustly overcharged for car finance during a 14-year span, is being inundated with tens of thousands of enquiries daily.
Depending on the outcome of a significant court case, UK drivers could see tens of billions of pounds returned to them in the coming months.
Those who initiated a car financing deal between 2007 and 2021 may have been wronged without even realising it. As the court case linked to this scandal approaches its conclusion, we’ve compiled a comprehensive guide to keep you informed.
(Image: Jordi Salas via Getty Images)
So, what’s the hold-up?
On April 1 (no joke), the Supreme Court commenced its hearing to determine whether the Court of Appeal’s ruling should stand. The Court of Appeal’s decision took many by surprise when it ruled that all car finance agreements with hidden commissions were unlawful.
This verdict implies that a larger number of people will be entitled to refunds from lenders. Currently, we’re waiting to see if the Supreme Court will overturn this decision.
Car finance companies Close Brothers and Motonovo escalated the case to the UK’s highest court following the Court of Appeal’s ruling last October.
When can we expect a judgement?
Supreme Court rulings typically take anywhere from a few weeks to several months. Given the gravity of this case, it’s likely to be fast-tracked, although the exact timing of the ruling remains uncertain.
What’s the fallout if the Supreme Court reverses the ruling?
While the number of individuals due for payouts will shrink, a significant number of people will still be entitled to refunds. This is because two types of car finance mis-selling are currently under scrutiny: Discretionary Commission Arrangements (DCAs) and Commission Disclosure complaints.
So, what exactly is a DCA?
Roughly 40% of car finance deals struck between 2007 and 2021 fall under DCAs. Brokers and dealers bumped up the interest customers had to fork out on their car finance, often without informing them, on Personal Contract Purchase (PCP) and Hire Purchase agreements.
The motive? To boost their commission.
And what about a Commission Disclosure complaint?
This is the main bone of contention in the ongoing Supreme Court hearing and hinges on the Court of Appeal’s verdict that car finance agreements failing to disclose all commission details were unlawful. This includes the sum brokers would pocket as commission, which was seldom revealed.
Money Saving Expert estimates this applies to a whopping 99% of car finance cases, including DCA cases. If upheld, this could mean that 99% of all individuals who signed car finance deals between 2007 and 2021 might be due a refund.
So, what’s the next step?
Once the Supreme Court has made its ruling, the Financial Conduct Authority has promised to outline the next steps within weeks. If the Court of Appeal’s judgement is overturned, approximately 40% of individuals who entered into car finance agreements during the relevant period could be eligible for a refund.
The total sum could reach around £10 billion. However, if the ruling is upheld, the number of potential claimants could increase significantly, potentially pushing the compensation pot into the tens of billions.
Is it worth lodging a complaint now?
Absolutely. While the Supreme Court Case’s outcome may require lenders to proactively reach out to those who might be due a refund, submitting a claim ensures you’re less likely to be overlooked for any reason.
This is especially crucial if you’ve moved house since purchasing a car on finance, are planning to move soon, or have had any changes to your contact details.