£450m Set Aside by Lloyd’s for Car Finance Investigation

£450m set aside

Lloyds Banking Group ensures £450m Set Aside to cover the cost of the car finance investigation for potential mis-selling.

Here, we explore the details of mis-sold car finance, the investigation, how to make a claim if you think you have been affected, and why £450m set aside by Lloyd’s Banking Group is significant news.

What Was the Issue with Car Finance Mis-Selling?

In January 2021, the FCA banned the mis-selling tactic, potentially frequently used by finance providers to gain commission by raising interest rates on PCP finance agreements. We know this by the cases already recorded by customers and brought to the news.

However, a significant amount of people have submitted complaints of being overcharged before the practice ban.

What is This Banned Practice Called? How Does it Work?

Before January 2021, brokers held ‘discretionary commission agreements’ with certain car finance lenders. As a result, brokers were encouraged to adapt customer contract interest rates. This way, brokers earned way more commission due to inflated interest rates. 

As this possibility stands, if you purchased a vehicle using finance through a broker using one of these agreements, it’s possible that you were charged more than necessary. For this reason, Lloyd’s Banking Group have £450m set aside, to cover their own potential mis-selling costs, just in case the FCA investigation proves them guilty of mis-selling car finance to their customers.

What Do The FCA Say?

The FCA says they are ‘examining the issue’ and using powers under the Financial Services and Markets Act 2000, to look into sales and historical motor finance commission arrangements. This will be applied to several various firms.

As the finance sector watchdog enters into an investigation into mis-selling in car finance, millions of drivers may acquire compensation.
‘May have been charged too much’ – regarding certain customers for car finance loans pre-January 2021.

Have You Been Affected by Mis-Selling?

According to the FCA, you may be affected if these factors apply to you: Between your broker and lender; there existed a discretionary commission agreement before 28 January 2021, you purchased a car using HP or PCP finance.

Which Lenders are Involved?

The main lenders with which My Car Finance deals are predominantly; Moneybarn, Advantage and Oodle.

How Much Compensation Am I Entitled To?

If you qualify you can potentially receive a redress, but the amount depends on the case itself, as each is individually assessed for eligibility, and possible compensation.

Who is Eligible?

If you financed a car using a HP or PCP agreement between 2007 and 2021, you could be eligible for compensation.

  • Were you aware of the commission the dealership would receive?
  • Did the dealer clearly explain the different finance options available?
  • Could you afford the credit agreement at the time of the sale?
Who is My Car Finance?

We are a trading style of Barings Law, offering no win, no fee claims for cases of mis-sold car finance. 

How to Claim?

Claiming with My Car Finance is a simple 3 step process. With just a few details, you can begin an application today. Enter your registration into our automatic number recognition system to get started. Click the button below to begin!

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