MARTYN JAMES

What you need to know about the car finance compensation scheme

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Chances are you've heard about car finance and a new compensation scheme for people who may have been mis-sold credit to buy a vehicle. By the look of my postbag many readers are flummoxed about what the announcement means. Here's a guide to your rights.

What do I need to know?

The Financial Conduct Authority (FCA) has announced proposals for a compensation scheme for millions of drivers who may have been mis-sold deals to buy a car or vehicle on finance

Key points to remember are:

@ You need to have been sold a motor finance agreement taken out between April 6, 2007 and November 1, 2024.

@ The compensation scheme only applies if you were sold an unfair contract, given inaccurate information or excessive commission was paid by the lender to the broker.

li It's estimated the scheme will apply to just under half of people (44%) who were sold policies during this period.

@ The FCA estimates up to 14.2 million people are affected.

@ Lenders could pay out £8.2billion in compensation.