Martin Lewis says motorists could be in line for one of the biggest payouts in UK history after more than one million complaints are submitted over car finance

Martin Lewis has said drivers could be entitled to one of the biggest payouts in UK history as more than a million complaints have been made about car finance.

Millions of customers have expressed concerns that they have been overcharged on car finance, according to MoneySavingExpert.com.

Consumer advocate Martin Lewis said the mis-selling of car finance has the potential to be the “second largest claim payout in UK history” after the PPI scandal.

Around 1.1 million complaint emails have been sent through a free tool on the MoneySavingExpert.com website, founded by Mr Lewis, representing around 30,000 a day.

The tool and guide were launched on February 6 in response to the UK financial regulator opening a major investigation into hidden and unfair sales practices in the car finance market.

Before being banned in January 2021, some lenders allowed brokers to adjust the interest rates they offered customers on a loan, which could mean they received more cash in commission.

The investigation found that the sales practice, known as a discretionary commission arrangement, led to higher financial costs and was unfair to consumers.

Black Horse is currently the most claimed lender through MoneySavingExpert’s car finance tool, with around 16% of the total.

Owned by Lloyds Banking Group, the dealership offers loans on cars such as Jaguar, Land Rover and Suzuki.

Last month, Lloyds said it was setting aside around £450 million to cover potential costs and compensation related to claims.

Volkswagen Financial Services is the second most reported lender, followed by Stellantis Financial Services and Santander, according to the consumer platform.

Mr Lewis said: “The number of complaints in just over a month is staggering, off the charts, much more than I expected.”

‘It is therefore not surprising that some businesses struggle to respond to complaints within a decent timeframe.

“To frustrated complainers, I would say that for now we should be prepared to give businesses some leeway on deadlines, but businesses urgently need to increase their complaints handling resources.”

The money expert said the number of complaints about car finance suggests it could be a bigger problem than the PPI mis-selling scandal that rocked UK lenders in previous years, based on the number of complaints.

He said the problem “seems to be building up even more rapidly” than the scandal in which banks and companies paid millions in compensation.

Lloyds has had to pay billions of pounds to compensate customers who were mis-sold payment protection insurance since the mid-1990s.

“In terms of value, the mis-selling of car finance is potentially going to be the second largest claim payout in UK history – possibly more than £10 billion refunded – which could even provide a boost to economy like the PPI did,” Mr. Lewis said.

Meanwhile, the Financial Conduct Authority (FCA) said it wants to ensure customers are compensated in an orderly and efficient manner, if it finds they have lost out due to widespread misconduct.

This could mean establishing a formal repair plan. The control body must present its next steps at the end of September.

The MoneySavingExpert.com tool helps people create an email and send it to their car finance provider, if they think they are likely to be affected.

Lewis said if people believe they might be eligible, then they should consider filing a complaint “as soon as possible.”