Mis-sold car finance average payout: how much could you get?
This means if you took out a car finance arrangement before 2021 you could be in line for compensation.
In the build up to the ruling, the Financial Conduct Authority (FCA), the industry watchdog, is reviewing how it would implement a large-scale redress scheme.
Lloyds Bank, meanwhile, have set aside £1.2 billion in potential compensation costs – with other lenders following suit.
CHECK HERE
What are mis-sold car finance claims?
Most cars in the UK are bought on a finance agreement, like a Hire Purchase (HP) or Personal Contract Purchase (PCP) agreement.
Before being outlawed in 2021, these agreements could be sold with 'discretionary commission'. This meant your finance provider was allowed to increase your interest rate and pocket the difference as commission.
Drivers didn't know that they could have paid for a cheaper loan and that part of their monthly repayments were funding this commission structure.
What is the average payout for mis-sold car finance?
Until the matter is resolved in court, the exact compensation drivers can expect remains unclear.
However, we do know the average driver could be due thousands. My Claim Group, a claims management company, estimates that the average driver could receive up to £4,000**.
Separate information from the FCA also found that a £10,000 finance agreement on PCP or HP could have cost the average consumer £1,100 in additional interest charges.
This information will likely play a role in calculating the compensation you will receive, alongside a few other factors.
What factors could affect my car finance mis-selling payout?
A few individual factors will likely influence your car finance payout. This includes:
The interest rate you received
The discretionary interest charged might differ depending on your lender. A higher rate means you may have paid more in commission to your dealer, and this could mean you're due an increased payout.
The length of the agreement
When purchasing on finance, the length of the repayment period affects borrowing costs.
Longer repayment periods typically mean lower monthly payments but higher overall borrowing costs. Shorter repayment periods, on the other hand, result in higher monthly payments but lower total costs.
So, repayment plans can influence the total interest paid on your finance. A longer repayment period at a higher rate could mean you paid more in unfair commission.
The size of the loan
In addition to the length of the agreement, the size of the loan also plays a role in determining the total interest paid.
A larger loan charged at a higher rate means you could have paid more in discretionary commission.
Can I make multiple claims to increase my payout?
Discretionary commission arrangements were commonly used before their ban in 2021. During this time, drivers may have entered into multiple finance agreements, each with its own hidden commission.
This means you might be eligible to make multiple claims and receive multiple payouts.
CHECK HERE
How to apply for compensation
You do not need to use a claims management company to make a complaint, you can do it directly via your lender and eventually the Financial Ombudsmen Service.
My Claim Group work with a panel of solicitors and they work on a no win no fee***. This does mean if it's successful then they will take a cut of your total payout but you don't have to deal with the administrative hassle of claiming.
The Law Firms they work with take between 18 % and 36% inc VAT of successful claims.
The total amount you would be due to pay depends on the level of redress you have received.
My Claim Group is a trading name of the Claims Protection Agency Ltd, authorised and regulated by the Financial Conduct Authority (FCA No. 836470).
*My Claim Group will undertake a free check at no cost to you on your behalf to assess if you may have a vehicle finance claim.
**See link for the FCA reference, solicitor fee tables & average valuations: https://myclaimgroup.co.uk/dca
*** If you proceed, our panel solicitors work on a no win, no fee basis (subject to exclusions, for full details click on: https://myclaimgroup.co.uk/no-win-no-fee). Solicitor fees are up to 36% inc VAT. We receive a fee after a successful payout or a referral fee from your solicitor and this does not affect the compensation you will receive. You do not need to use a claims management company to make a claim; you can do this yourself for free by contacting the car dealership or finance provider and if that is not successful you can complain to the Financial Ombudsman Service.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
an hour ago
- The Independent
Aviation staff need disability training, Baroness Tanni Grey-Thompson says
Airline and airport staff should be better trained to support disabled passengers, a Government-commissioned review led by Baroness Tanni Grey-Thompson has found. The Paralympian and crossbench peer said the 19 recommendations put forward by her taskforce should be 'turned into action' which puts accessibility 'at the heart of aviation'. The Aviation Accessibility Task and Finish Group called for disability awareness training to be rolled out across all aviation roles, including airline crew, assistance providers, ground services, security and hospitality staff. It highlighted a need for passengers to access information easily about their travel, including how they can request and book assistance, where they can find in-airport support services, and detailed guidance on how their mobility aids will be transported. The taskforce also called for passengers to be able to find transparent information on complaints procedures. The group will now work to help ensure its proposals are adopted by airlines, airports and regulator the Civil Aviation Authority. Lady Grey-Thompson said: 'This report is the next critical step in making air travel more inclusive for disabled people. 'I'm grateful for the commitment the industry has shown to making change and breaking down barriers in aviation for everyone, bringing freedom to travel, whether for leisure or work, and to connect with friends and family. 'We know there's more work to be done, and I look forward to seeing these recommendations turned into action which truly puts accessibility at the heart of aviation.' Transport Secretary Heidi Alexander said: 'Everyone should be able to travel with dignity and be respected at every stage of their journeys, including disabled passengers. 'That's why we established this group in November last year, and I welcome this report's findings which will clear the runway for greater accessibility in aviation.' Tim Alderslade, chief executive of trade body Airlines UK, said carriers are 'committed to removing barriers so that flying is accessible to all', and will support the 'implementation of these recommendations'. Karen Dee, boss of industry group AirportsUK, said the report will 'build on the work already being done by airports, and the wider sector, to ensure air travel is accessible to all'. In June, BBC journalist and wheelchair user Frank Gardner was forced to wait 95 minutes for a medical lift so he could leave an aircraft that had arrived at Heathrow's Terminal 5. The airport apologised and said the delay was caused by its assistance provider responding to a medical emergency, which reduced the number of vehicles available.
Western Telegraph
2 hours ago
- Western Telegraph
Look at increasing Scottish Government borrowing limits, MPs tell UK Government
Currently, the Government is limited to borrowing £600 million for day-to-day spending and £450 million for capital projects. But in a report from the Scottish Affairs Committee at Westminster on the fiscal arrangements north of the border, MPs pushed for the limits to be increased. The report said: 'At present, the Scottish Government's limited borrowing powers constrain its ability to manage fiscal shocks, as it is only able to borrow for resource purposes to cover forecast errors. We encourage the UK Government to consider reforming the Scottish Government's capital borrowing powers Scottish Affairs Committee report 'Capital borrowing limits are currently linked to, and grow in line with, inflation, which may not necessarily be the highest metric of growth.' It added: 'We agree with the Secretary of State that borrowing limits should be linked to the measure which offers the Scottish Government the highest level of flexibility but, crucially, we note that which metric delivers this remains undetermined. 'The UK Government should therefore publish a transparent analysis of what borrowing limits would look like based on the different metrics advised in the evidence for this inquiry. 'At the next fiscal framework review, we encourage the UK Government to consider reforming the Scottish Government's capital borrowing powers, by automatically coupling borrowing to the metric which offers the highest limit.' The report comes at the end of an inquiry by the committee which sought to gauge the effectiveness of the Barnett Formula – the measure which dictates the level of funding the UK Government sends to Scotland every year. The MPs found the measure was 'fit for purpose', although it is 'imperfect'. Scotland's Finance Secretary reiterated her Government's support for 'full fiscal autonomy' in a written submission to the committee (Jane Barlow/PA) The committee also rejected calls for the formula to shift and provide funding to Scotland based on need. Scotland, the report said, already receives more funding per head than any other country in the UK and a change in the framework could see funding cut. In written evidence to the committee, Scottish Finance Secretary Shona Robison reiterated the Scottish Government's support for full fiscal autonomy – an arrangement which would see powers over tax and spending devolved. But the committee dismissed such a move as not being a 'realistic prospect'. 'Fundamental questions remain about how full fiscal autonomy would work in practice, and whether it would be operable within the constraints of the UK's current devolution settlement,' the report said. 'Practicality aside, we do not believe that a compelling case has been made that such a change would automatically result in Scotland receiving a higher level of funding.' Ms Robison declined an invitation to appear before the committee, leading the MPs to say 'do not see how we can consider this a serious proposition, and we remain to be convinced that this proposal is desirable in principle, let alone workable in practice'. Responding to the report, Ms Robison said: 'This report rightly recognises that Scotland's finances remain largely dictated by the UK Government's spending decisions, irrespective of the impact on Scottish public services. 'That has meant Scotland has been left with a shortfall of £400 million to pay for the Chancellor's national insurance increase, and saw Scotland short-changed by more than a billion pounds over the next three years at the recent spending review. 'The decisions we have taken to ask higher earners to pay a little bit more – while most income tax payers pay less than in the rest of the UK – mean that we can support vital public services and provide free tuition, prescriptions and the Scottish child payment to help tackle child poverty.' Scottish Secretary Ian Murray said: 'The spending review provided the Scottish Government with an extra £9.1 billion, giving them a record settlement. 'People will expect that to deliver better outcomes for Scots – lower NHS waiting lists and better attainment in our schools. 'Spending per head in Scotland is around 20% higher than the rest of the UK thanks to the Barnett formula. This report confirms that it appears to be the position of the Scottish Government to scrap that formula that delivers higher funding – they should explain why they want less money for public services in Scotland. 'Their plans for full fiscal autonomy would mean a £12 billion cut in public spending for Scotland.'
Daily Mail
2 hours ago
- Daily Mail
ALEX BRUMMER: A reckless plan risks a return to boom and bust
Chancellor Rachel Reeves was working at Halifax Bank of Scotland (HBOS), a major mortgage lender, during the great financial crisis of 2008. But she appears to have forgotten the key lessons of that searing experience. HBOS collapsed after embarking on a mad dash to become Britain's largest consumer and mortgage bank. It had abandoned the prudence which should be at the core of safe lending. As a result, HBOS was forced into a rescue merger with Lloyds-TSB, while Gordon Brown's Labour government propped up the enlarged institution with £20.3billion of taxpayer money. Yet under new proposals unveiled by Ms Reeves last night amid the grandeur of the Mansion House in the City of London, tough rules designed to keep the financial system safe will be swept away. Helping young people gain a foothold on the housing ladder is a laudable goal and ending the 'red tape' sounds like a great idea – particularly if it supports the dream of a home-owning democracy first advocated by Margaret Thatcher more than four decades ago. But those of us old enough to remember the collapse of the housing market in the 1990s – when interest rates soared under John Major's government – and the subsequent catastrophic collapse of Northern Rock in 2007 cannot but be horrified. Ms Reeves's plan is a slap in the face for prudence. In the 1990s 'negative equity' – when the cost of mortgages exceeded the value of the homes purchased – saw thousands of buyers abandon their properties and drop the keys back through the doors of mortgage lenders. Northern Rock collapsed after it junked historic affordability rules and granted buyers 100 per cent-plus mortgages –destroying confidence in its prospects of remaining solvent. The subsequent run on the bank, not to mention the long queues of customers seeking to withdraw their money, are etched on the national memory. The then head of the employers' group the CBI, Richard Lambert, argued that it sent a terrible image around the world and made the UK 'look like a banana republic'. It was hard to disagree. Yet under the Chancellor's proposed arrangements, borrowers will be able to obtain home loans at up to six times their salaries, a huge leap from the current four-and-a-half times limit. Prospective home owners could, in future, apply for mortgages with an income of just £30,000, down from £35,000, and with joint incomes of only £50,000. The Treasury says that these new 'Helping Hand' mortgages – to be administered by Nationwide – are aimed at people with low incomes. True, they might genuinely help aspirational homeowners in some regions of the country. But they will do little to address the plight of young people in London and other areas of fast economic growth such as Cambridge, where house prices are driven ever higher by the availability of well-paid starter jobs. Moreover, together with the weaker income and spending checks that Ms Reeves plans to usher in, easy-to-get mortgages are bound to increase the prospect of defaults. And that, in turn, could damage future lending capacity. Since taking office, Ms Reeves has been seeking new tools to drive growth. She believes that prosperity has been held back by rules imposed by the Financial Conduct Authority (the City regulator) and the Bank of England. Yet there is no escaping the real reason for Britain's vanishing growth and the accompanying assault on jobs: the culprit is the Chancellor and her £40billion tax-raising budget with its crippling rise in employers' National Insurance contributions. Now Ms Reeves is seeking a backdoor solution to a flatlining economy by reinvigorating the housing market and encouraging consumer credit. Yet she also risks returning to Britain's appalling record of financial boom and bust.
