Financial Conduct Authority PCP Investigation So Far

As you will know, here at PCP Mis-Sold, we aim to highlight and prevent instances where a PCP (Personal Contract Purchase/Personal Contract Plan) has been mis-sold, most of the times by third parties who have been acting deliberately unscrupulous. This is an issue that the key organisations within the industry are keenly aware of, so much so that in July 2017, the Financial Conduct Authority (FCA) began their own investigation into malpractice as it pertains to the selling of PCP. The goal of this investigation is to determine if insurance sellers are actually properly assessing whether their customers can afford to purchase cars that they are offered on credit, and whether the deals themselves stand up to scrutiny.
The investigation is now more than a year on from its instigation, and their work has included a number of studies designed to understand how the market operates, and how such deals generally come to be based on people’s personal and financial circumstances. One of those includes an analysis of several million credit files towards a mystery shopping exercise, which provides a small glimpse into a large number of consumers. It could be argued that the FCA are only scratching the surface with their work to date, and this investigation will continue in the months, if not years, to come.

What the FCA have reported so far, though, is that consumers who have strong credit scores have benefited from the most growth, which is understandable. Conversely, for those people who have poor credit scores, arrears and default rates are higher, thus making them prone to tougher agreements, and places them under greater pressure to take anything that is offered, which perhaps contributes to some of the mis-sold PCP deals.

In addition, and more importantly, the FCA noted that incorrect management of commission agreements could convince dealers to offer unnecessarily expensive finance deals for consumers, with a worrying number not given sufficient, or even any, key information about what they are agreeing to, the terms and conditions, and any other important details accessible on the websites of both the lenders and the dealers.

At this point, the FCA seem to be uncovering evidence of certain tactics being used which have led to the mis-selling of many PCP deals for customers who are in a weaker financial position. The hope is that, as the investigation rolls on, we will see more concrete evidence of malpractice within the industry, which it is hoped will ultimately lead to those who have behaved inappropriately receiving sufficient punishment, and the eventual results ultimately being of benefit to both consumers and the industry as a whole.

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