Thousands more drivers who bought car finance could be eligible for a refund after an announcement by the regulator today, which is “huge news”, according to consumer champion Martin Lewis.

The Financial Conduct Authority has announced plans to consult on extending the time firms have to deal with complaints from the Motor Finance Commission.

Lewis says this will apply to all complaints relating to car finance commissions, not just complaints relating to discretionary commission arrangements (DCAs) covered previously.

This could mean that “nearly everyone who entered into car finance deals could file a claim and “potentially get their money back.”

“This could potentially more than double the number of people involved and would really start to look more like a ladder of PPI payments (and a substantial threat to the car finance industry),” he said on X.

The Court of Appeal recently ruled in favor of three motorists who were not informed that the car dealers with whom they had entered into car finance agreements were receiving a 25% commission, which was then added to their bills.

The ruling says it is illegal for car dealers to receive commission from lenders without obtaining informed consent from the customer regarding the payment.

Lewis says this “signals that the FCA is laying the groundwork to broaden the scope of its car finance investigation in the future, so not just the 40% of past claims that included DCAs (in which dealers could increase their commission by increasing interest), but all commissions including fixed commissions”.

The judgment concerned fixed commissions in car finance contracts as well as DCAs (agreements which grant brokers the ability to adjust the interest rates offered to customers), which were banned by the FCA in 2021.

The FCA’s proposals are expected to be published within two weeks and, if adopted (Lewis says it is a “done deal” as it is a short consultation period), it would mean the complaint extension would be in place by the middle of next month.

We covered the car finance scandal, including how much compensation claimants could be owed and how motorists can file a claim, in our Basically… series: