Following the car finance mis-selling scandal, there has been a rise in claims advertisements promising to help you get your money back. However, it is important to bear in mind two key things: some of these are fake advertisements from scammers, and if an automatic payout is instituted you will still have to pay a fee.
Car Finance Mis-selling: Background
In 2024 the Financial Conduct Authority (FCA) announced that it was investigating the mis-selling of car finance products. They stated that some customers may have been overcharged on car finance loans which were sold before January 2021.
Since January 2021, discretionary commission arrangements have been banned by the FCA, but before this, lenders were allowed to let brokers and car dealers raise the interest in order to increase their commission without the customer being aware. For more information on the mis-selling of car finance, check out this blog.
Scammers Seize Opportunity
Unfortunately, scammers have leapt at the chance for a new way to con victims, using fake car finance claims ads to lure in new victims. Which? found 4 scam adverts posted on Facebook and Instagram claiming to help customers who have been mis-sold car finance to find out if they are owed compensation.
These ads told those who wish to claim to leave their details to find out if they qualify and that someone will be in touch to discuss their claim. However, this is a way of scammers getting your personal information so that they can target you for scams in the future.
Potential Consumer Redress Scheme
The FCA have stated that if it is concluded that motor finance consumers have lost out following the outcome of the Supreme Court judgement, they will likely consult on an industry-wide redress scheme. This would mean creating rules for how firms assess claims and calculate redress (putting things right), and putting checks in place to ensure these rules ae followed.
Therefore, they have warned that “Consumers should be aware that by signing up now with a CMC or law firm, they may end up paying for a service they do not need and having to pay up to 30% in fees out of any award they may receive”
This is because by using a Claims Management Company (CMC), you will need to pay a fee, and if an automatic payout system is implemented, then you will have essentially paid this fee for now reason.
“Remember the big picture, the big message I’m trying to give you right now, is the court may end up ruling that you have already been ripped off once. Don’t rip yourself off again by pointlessly signing up to a ‘no win, no fee’ firm, in the couple of weeks’ run-up before we hear what the Supreme Court is going to say.”