Martin Lewis has told viewers that all car drivers who bought a vehicle on finance could be in line for an average payout of £1,100 if an investigation finds in their favour. The Financial Conduct Authority (FCA) is investigating the practice where lenders allowed car dealers, or whoever arranged the loan, to adjust the interest rates they offered customers for car finance.
This was known as a discretionary commission arrangement (DCA) and it may have been applied to a person’s loan without them knowing. The FCA banned this in 2021 but there have since been a high number of complaints from customers about how much they were charged before the ban.
Most of these have been rejected by the brokers (mostly car dealers) but the FCA investigation, which reports back in May 2025 will decide if this is fair. Mr Lewis explained: “It was about discretionary commission arrangements. That’s where lenders said to car dealers and brokers ‘you can make up the interest rate and if you push it higher, we will give you more commission’.
“And this was done without telling consumers. So it was hidden. They didn’t know about it. And up to 40% of car finance deals over the period we’re talking about had this discretionary commission arrangement. So are you one who may be owed thousands back?
“Well, the average payout if it happens and it’s not certain it will happen, would be £1,100. This is for personal motor vehicles, cars, vans, motorbikes and camper vans, not static caravans.”
He said that for people to potentially be eligible they’d have to buy the vehicle on a personal contract plans or hire purchase deals not leasing. He added that the the key dates are from April 2007 to 28 of January 2021 when the FCA banned the DCAs. Mr Lewis said that given the DCA wasn’t listed anywhere a person would have to complain.
He said: “So you have to put in a request and say ‘did I have a DCA? And if I did, I want to put in a formal complaint’. Now, while nothing will happen until May, when the FCA reports you should log a complaint as soon as possible in case there’s a time bar later.
“So the earlier you get your complaint in the better in case it stops you being time-barred because we’ve got so much uncertainty.” Mr Lewis said there was no need to use no win no fee lawyers because there are free tools online. 2.4 million people have already complained using the tool on the Money Saving Expert site.
Mr Lewis said the Court of Appeal had ruled that a car firm cannot get commission without a customer’s fully informed consent. He said: “To get fully informed consent, the customer must know all the facts, including the amount of the commission, which was never told. That is a radical clear viewpoint. It increases the likelihood of car finance mis-selling compensation via the FCA next May because the FC had delayed due to these court cases to see what was said.
“And so now they’ve ruled in a pro-consumer way. It strengthens the regulator’s hand that if it rules in a pro-consumer way, then it is less likely to be successfully challenged in court under a judicial review because the courts have already given a view subject to it going to the court.”
He described the ruling as ‘seismic’, applying to all lending commissions. For more details on the FCA investigation click here.
To use the Money Saving Expert car finance reclaim tool click here.