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You can claim if you meet any of the following.
The Commission Was Not Disclosed
However, you were not informed about the fact that the dealer will gain commission for your finance arrangement or how this commission will influence your interest rate.
Your Interest Rate Appears Unreasonably High
Your APR was higher than expected, especially when compared with:
- Loans offered by banks during this time
- Finance provided by other brokers
- Agreements concluded later under similar circumstances
The Agreement Was Not Clearly Explained
You were not given a proper explanation of:
- The total cost of credit
- How interest was calculated
- The impact of mileage limits or early termination
You Felt Pressured to Take a Specific Finance Option
You were steered towards PCP without being properly offered alternatives such as:
- Hire purchase
- Personal loans
- Paying outright
What You Were Told Did Not Match the Paperwork
There were things being stated verbally by the salesperson which were not reflected in the documents.
Add-Ons Were Included Without Proper Consent
Insurance products, warranties, or additional extras were added to a finance agreement without a full explanation or consent.
Common Lender and Dealer Behaviours which lead to Mis-selling
Knowing how mis-selling took place can assist in establishing eligibility.
Discretionary Commission Arrangements (DCAs)
Under DCAs, a dealer had an incentive to raise the interest rate and charge a higher commission. An obvious conflict of interest existed in such an arrangement. Additionally, this practice was not always transparent.
Inflated Interest Rates
The customers were overcharged without any benefit to them, but solely to boost the dealer's profit.
Lack of Transparency
Important financial information was hidden in paperwork or not discussed in verbal communications.
Inadequate Pre-Contract Information
The customers were not given ample time to grasp an understanding before inking a deal.
Sales-Driven Advice
The recommendations were based on potential commission revenue rather than suitability for the customer.
FCA Regulations and Consumer Protection
The Role of the Financial Conduct Authority (FCA)
The FCA controls consumer credit and makes lenders and brokers subject to:
- Treat customers fairly
- Act transparently
- Avoid conflicts of interest.
- Provide clear and understandable information.
The 2021 Ban on DCAs
In January 2021, the FCA prohibited Discretionary Commission Arrangements because of the level of harm they were causing to consumers.
Ongoing FCA Review and Redress Scheme
The FCA is currently assessing car finance agreements issued in the past and consulting on a possible compensation scheme for agreements made between April 2007 and November 2024.
However, this means that even some existing agreements may be eligible.
Consumer Duty
The New FCA Consumer Duty rules simply reinforce a pre-existing need to achieve fair outcomes, including in respect of historical sales.
Who Is Likely to Be Eligible?
You may be eligible to make a claim if:
- You took out a PCP or hire purchase agreement.
- The agreement was for personal use.
- It started between April 2007 and November 2024
- Commission or interest was not properly disclosed.
- You were not given clear, fair information.
Types of Vehicles Covered
- Cars
- Vans
- Motorbikes
- Motorhomes
Who Is Usually Not Eligible
- PCH (Personal Contact Hire)
- Business-only finance agreements
- Agreements taken out entirely after DCAs were banned, unless other issues apply
What Compensation Could You Receive?
The goal of compensation may be to restore you to a position you would have occupied if a fair deal had been reached.
This may include:
- A refund of excess interest paid
- Additional interest on overpayments
- Erasure of Unfair Charges
The average figures being bandied about in public circles are in the region of hundreds or thousands of pounds, depending on:
- Amount borrowed
- Interest rate
- Agreement length
- Amount of commission involved
Every case is evaluated separately.
What to Prepare Before Submitting a Claim
Being organised will go a long way in ensuring a seamless claims procedure.
Documents to Gather
- Your PCP or hire-purchase agreement
- Pre-contract credit information
- Any emails or letters from the dealer or lender
- Bank statements reflecting repayment payments
- Notes of information given at the time of sale
Do not worry if you do not have everything. Most lenders have to keep records.
Information to Check
- Start and end date of the agreement
- Name of the lender
- Interest rate and APR
- Any add-ons included in the finance
Common Mistakes to Avoid
- Guessing agreement dates
- Naming the dealership instead of the lender
- Submitting incomplete complaints without evidence
How to Submit a PCP Mis-Selling Claim
Submitting a Complaint to the Lender
You can submit a complaint to the lender, highlighting:
- Why you believe the agreement was mis-sold
- What information was missing or misleading
- How did this affect the interest you paid
Escalating to the Financial Ombudsman Service
If your complaint is not accepted or considered, you can try taking your case to the Financial Ombudsman Service.
FCA Redress Scheme
Where an FCA-sponsored compensation scheme is put in place, claims can either be processed automatically or via a centralised system.
FAQs
What counts as PCP mis-selling?
Any Failure in not disclosing commissions, conflicts of interest, or major financial information at the time of purchase.
Can I claim if I have an existing PCP agreement?
Yes. A great many claims involve matters which were concluded years ago.
Will I need to employ a solicitor or a claims company?
No. But you can place a complaint yourself, although some people hire professional help.
How Long Do PCP Claims Typically Take?
Timescales can differ, but usually claims are processed within some months based on complexity and reactions from lenders.
What if I no longer have my paperwork?
A claim can still be made. Often, lenders are obliged to deliver copies of agreements when asked for.
Next Steps
If you think you might have a mis-sold PCP credit, you need to see if you are eligible and must gather information. Early registration can help protect your rights and put you in a better position if a national compensation scheme is proposed.
Important Notice
This guide is for informational purposes only and does not constitute legal or financial advice. Eligibility and outcomes depend on individual circumstances.
