3 min read
If you've ever felt like you've been taken for a ride with car finance, you're not alone. Recent investigations by the Financial Conduct Authority (FCA) have revealed concerning practices in the industry that may have left many UK drivers out of pocket.
At Justizia, we understand the frustration of being hit with hidden charges and feeling like you've been unfairly treated when financing a car. That's why we're here to shed some light on the issue and offer a simpler way forward.
Understanding the Problem
Before January 2021, some car finance lenders and brokers had arrangements in place that allowed them to adjust interest rates, potentially leading to customers being charged more than they should have been. These discretionary commission arrangements incentivised brokers to maximise rates to boost their own earnings, leaving consumers at risk of overpayment.
While the FCA banned this practice in January 2021, many customers have raised concerns about being overcharged before the ban took effect. The Financial Ombudsman Service has received thousands of complaints from individuals who suspect they've been unfairly charged for their car finance.
What You Need to Know
If you bought a car on finance before January 2021 and suspect that there was a discretionary commission arrangement between your lender and broker, you may be affected by this issue. Contacting your lender or broker can help clarify if such an arrangement existed.
The potential compensation for affected individuals could range from significant amounts, with estimates suggesting the industry could face billions of pounds in redress. The FCA has assured that if widespread misconduct is found, steps will be taken to compensate consumers in a fair and efficient manner.
How to Take Action
If you believe you've been affected by overcharging on your car finance, there are steps you can take to seek recourse. Start by contacting the firm that sold you the car finance product. If you're unsatisfied with their response, you can escalate your complaint to the Financial Ombudsman Service.
It's important to note that due to the ongoing investigation, the usual timelines for responding to complaints have been extended. Providers won't have to respond to complaints related to this issue until after September 25, 2024, at the earliest. Additionally, the referral window to the Financial Ombudsman Service has been extended to 15 months for these types of complaints.
Beware of Misleading Claims
While seeking compensation, it's essential to be cautious of claims management firms that may promise quick solutions. Some of these firms may mislead consumers about their eligibility for compensation, leading to unnecessary fees if your claim is successful.
At Justizia, we're committed to making legal and financial matters simpler and more accessible for everyone. We believe in transparency, trust, and empowering individuals to reclaim what's rightfully theirs. If you need assistance navigating car finance or any other legal or financial issue, don't hesitate to reach out to us at contactus@justizia.co.uk or call us on 0330 818 3415 for personalised assistance. You can also check out our car finance page on our website here. With Justizia by your side, getting justice just got a whole lot easier.
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