Martin Lewis has issued a fresh warning to drivers chasing compensation over mis-sold car finance, saying many may have been misled by claims management firms, according to the Mirror.
The MoneySavingExpert founder spoke out after the Financial Conduct Authority raised concerns about how some firms are signing customers up and what they are charging for the service.
Lewis said anyone who has already agreed to use a claims company should dig out the paperwork and check exactly what they have committed to, including the cut taken from any final payout.
The warning lands as millions of UK motorists potentially stand to receive compensation over hidden commission deals on car loans. The Supreme Court ruled on the issue earlier this year, paving the way for a wider redress scheme overseen by the FCA.
Crucially, Lewis stressed that drivers do not need to pay a middleman at all. Complaints can be lodged directly with the lender for free, and rejected claims can then go to the Financial Ombudsman Service, also at no cost.
Many claims firms charge around 30 per cent of the final award, plus VAT. On a £2,000 payout that can mean losing roughly £720 to the firm, money that would otherwise stay in the customer's pocket.
The scandal centres on car finance deals taken out before January 2021, when so-called discretionary commission arrangements were banned. These let brokers and dealers raise the interest rate to earn a bigger commission, often without the buyer realising.
Drivers who think they were caught up in the practice are being urged to check old finance agreements, go to their lender first, and only sign with a claims firm if they fully understand the fees and small print involved.