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Millions of New Zealanders could be owed money back on their car finance agreements following the Financial Conduct Authority's (FCA) review into the widespread mis-selling of car finance products. The FCA found that many lenders didn't properly assess whether customers could afford repayments, leading to significant financial hardship. If you've struggled with car loan repayments, or believe you were sold a finance agreement you couldn't realistically afford, you could be entitled to compensation.

Understanding the Mis-Selling Issue

The core of the problem lies in the way lenders assessed affordability. Historically, lenders often focused solely on declared income, failing to consider expenses like childcare costs, maintenance, or other regular outgoings. This resulted in people being approved for loans they simply couldn't manage, leading to repossession and financial distress.

How to Claim Your Compensation

Here's a step-by-step guide to navigating the claims process:

1. Gather Your Documents: Collect all relevant paperwork related to your car finance agreement. This includes the loan agreement itself, any affordability assessments you received, and any correspondence you’ve had with the lender.
2. Contact Your Lender Directly: The first step is to lodge a complaint directly with your lender. Clearly outline why you believe you were mis-sold the finance agreement, referencing the FCA's findings.
3. Be Patient: Lenders are currently processing a huge volume of claims. It's likely to take time for them to investigate and respond.

Why You Should Avoid Claims Firms (For Now)

While claims firms are advertising aggressively, it's crucial to proceed with caution. The FCA is developing a streamlined compensation scheme. Engaging a claims firm could cost you up to 30% or more of your compensation in fees. It’s generally advisable to wait for clear guidance from the FCA before considering using a third party.

Already Complained? No Need to Re-File!

If you’ve already submitted a complaint to your lender, do not submit another one. Your claim is already on record and will be handled under the new FCA compensation scheme. Filing duplicate claims will only complicate the process.

What's Next?

The FCA is working to establish a robust and efficient compensation scheme. Keep an eye on the FCA website (www.fca.org.uk) for updates and guidance. This is a significant opportunity for many New Zealanders to reclaim money lost due to unfair lending practices. Don't rush into anything; stay informed and follow the FCA's instructions to maximize your chances of a successful claim.