It has been revealed that drivers may be paid ‘thousands of pounds’ in compensation after car finance agreements were mis-sold. According to money expert Matt Allwright, the motoring industry has mistakenly sold vehicles to drivers and is now talking about large payments being handed out to ‘huge numbers of people’.

The Express reports that the Financial Conduct Authority (FCA) recently announced an investigation into misconduct in the car finance trade. Money saving expert Martin Lewis has also raised awareness of the issue and claimed the mistake could become the next PPI.

It has been revealed that brokers may have benefited from high-interest deals without correctly informing customers. The Financial Ombudsman Service recently sided with two consumers in cases against providers which formed the basis behind a larger probe.

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While speaking to BBC ’s Morning Live, money expert Matt said: “It is mis-selling on a massive scale. Huge numbers of people are involved.

"They are talking about an equivalent sum of around £40 billion which should be handed back in compensation. We are talking about thousands of pounds per person. Big money and lots of people affected.

“This is all to do with financing cars. We know 80 - 90 percent of new cars and used cars are financed. They are bought using a package like a PCP with personal contract purchase or hire purchase.

“Built into those it turns out has been a commission system which hasn’t been entirely clear and hasn’t been entirely fair. We know not all of those contracts, not all of those finance deals have been mis-sold but we think about 40 percent have been."

Money Saving Expert Martin Lewis has also revealed that ‘millions’ of motorists are likely to be impacted once the investigation concludes. The Money Saving Expert has predicted the FCA will offer customers a form of refund or more likely it will see the introduction of a ‘fixed redress scheme’. A quick back-of-the-envelope calculation saw Martin suggest that “billions of pounds” could be paid back to consumers.

Matt added: “We are talking about something that touches a lot of people in the car finance industry where the brokers, the dealers, the people selling the cars, have been profiting from higher interest rates. They have skin in the game when they are selling the car to you to have a higher interest rate than perhaps you could have got from them in the first place.”