Is Car Finance Mis-Selling the Next Big Litigation Wave?

The realm of consumer litigation is poised for notable change as the spotlight shifts towards claims of mis-sold car finance. Pogust Goodhead, a reputable legal firm, has recently introduced myfinanceclaim.com, building on the success of its mydieselclaim.com, to address potential mis-selling within the car finance sector.

According to the Financial Conduct Authority (FCA), there is mounting concern regarding the prevalence of mis-sold car finance. This concern is underscored by the Financial Ombudsman Service’s issuance of its initial two definitive rulings on motor finance commission, both in favour of the borrower, against Barclays Partner Finance and Black Horse.

Abby Thomas, the chief ombudsman, has articulated that these rulings may herald numerous similar complaints from consumers who feel they have been subjected to excessive charges for their car finance. In light of these developments, Martin Lewis, a renowned consumer finance expert, has drawn parallels to the PPI scandal, hinting at the possibility of the mis-sold car finance claims bearing comparable significance.

The FCA has outlined the issue, drawing attention to discretionary commission arrangements whereby brokers possessed the authority to adjust interest rates for car finance, resulting in higher commissions to the detriment of consumers. Although this practice has been prohibited since 2021, the FCA has received a substantial volume of complaints from consumers who believe they were unjustly charged prior to the prohibition.

Furthermore, the FCA has expressed apprehension regarding the fact that this form of borrowing does not fall under the purview of the Financial Services Compensation Scheme, leaving consumers vulnerable if providers fail to address complaints in a timely manner.

Pogust Goodhead has highlighted that millions of drivers who entered into personal contract purchase or hire purchase agreements may be eligible for considerable compensation owing to the lack of transparency and exorbitant costs associated with these agreements. Tom Goodhead, the firm’s chief executive, has underscored the imperative of holding lenders accountable for unfair practices that have resulted in financial losses for consumers.

In response to these developments, Martin Lewis has expressed confidence in the FCA’s actions, hinting at the potential implementation of a redress scheme for affected consumers. He believes that this could result in substantial payouts for those impacted by mis-sold car finance, potentially amounting to thousands of pounds for numerous individuals.

As the FCA forges ahead with its investigation, it has suspended the deadline for providers to address complaints related to car financing involving discretionary commission arrangements. This affords consumers additional time to voice their concerns, with the aspiration of securing equitable resolutions to their complaints.

In conclusion, the mounting focus on mis-sold car finance and the potential for substantial compensation payouts signals a shift in the landscape of consumer litigation. As the FCA takes proactive measures to tackle these issues, it is evident that consumers are being afforded the opportunity to pursue justice and equitable treatment within the realm of car financing.