Car Finance Claim: The Flood Gates Are Opening

Car Finance Claim: The wheels are beginning to turn for a potential financial mis-selling scandal surrounding car finance loans. And as the prospect of compensation starts to surface, we’re encouraging our clients to steer ahead and submit their claims as swiftly as possible.

Over the last decade, car finance has seen a significant surge, with roughly 6.8 million people now paying for their vehicles this way. It has become the second most common form of household borrowing after credit cards. However, as the number of loans has grown, so have complaints. In the 2022-23 financial year alone, the Financial Ombudsman Service (FOS) received 11,452 complaints about car finance loans – a staggering 87% increase from the year before.

Past Shadows, Present Clouds

Claims companies have grown more confident about the viability of car finance as an area of claims, especially in light of past financial scandals. The infamous Payment Protection Insurance (PPI) mis-selling scandal led to financial firms paying out £38.4 billion in compensation between 2011 and 2019. The issue stemmed from the selling of unnecessary add-on insurance to customers who were already protected under consumer laws.

It’s essential to note that while these claims were free to submit, many consumers turned to claims management firms who promised to handle the legwork in exchange for a cut of the payout. With a new potential mis-selling scandal on the horizon, we can likely expect to see a similar pattern.

What’s Driving the Car Finance Claims?

Mis-selling of car finance has raised several concerns. Car dealers used to earn discretionary commission linked to the interest rate a borrower was charged. This model, banned by the FCA in January 2021, often incentivised dealers to sell finance at higher interest rates. Additionally, undisclosed commission became a problem. Since 2014, car dealers and brokers have been required to disclose if they receive commission for selling a loan, but these rules were not always followed.

Get in Gear and Submit Your Claim

It’s important to remember that even if you took out a loan years ago, you can still submit a complaint. You must first complain to the lender and allow them time to respond. If you’re unhappy with the outcome, you can then take your case to the FOS. You don’t necessarily have to hire a claims management firm to do this, especially if you want to keep the full amount of any potential compensation.

At MyClaimsCentre, we want to keep you updated and informed about these potential issues. We understand the importance of making an informed decision when purchasing a vehicle. If you feel like you’ve been short-changed in the process, it’s essential to take action.

The signs are clear – the flood gates are opening, and now is the time to get your claim in. As we’ve seen in the past, acting sooner rather than later is often advantageous. This allows you to stay ahead of the rush and ensure your claim is processed promptly.

Whether or not you use a claims management firm, be aware of your rights, the paperwork involved, and any associated deadlines. Stay informed and take charge of your financial future today.

For more detailed information, see the full article from The Times posted on Saturday, April 08, 2023.

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