Personal Contract Purchase Claims

PCP Claims

Have you been mis-sold personal Car Finance?

Case Reference

UK Car Finance Mis-selling (FCA)

Service

Civil Litigation – Group Action

Year

2024 (Ongoing)

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Have you been affected by mis-sold PCP?

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The Financial Conduct Authority (FCA) found extensive evidence of mis-selling of all types of UK car finance agreements, including personal contract purchase (PCP) and (HP) agreements, indicating that millions of drivers could be due compensation. Nine in 10 customers pay for new cars on finance and many used-car buyers do too. While lots of people don’t have any issues with their contract, others have been mis-sold finance packages that they couldn’t afford, or that they paid over the odds for.

The new investigation comes amid concerns motor finance firms may be unfairly rejecting mis-selling claims from borrowers who believe their contract was more expensive because their dealer stood to earn commission by charging more.

While this practice has been banned since 2021, independent complaints arbitrator the Financial Ombudsman Service (FOS) says it’s heard from more than 10,000 people who fear they were overcharged. The FOS has also recently ruled in favour of two consumers on the issue, prompting the Financial Conduct Authority’s (FCA) probe.

Up until the FCA banned the practice in 2021, car dealers and brokers were able to receive commission linked to the interest rate that customers paid when leasing a car. This created an incentive to over-charge customers.

Because of this, millions of people may have entered into agreements without fully understanding the conditions or costs involved. For many drivers, this has meant shelling out significant sums in unforeseen additional charges, higher interest rates. Compensation for those affected could be in the £1,000s please register your details below.

FAQ'S

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The FCA’s investigation will apply to complaints where:

  • You bought a car using car finance before 28 January 2021, which is when new rules banning this type of commission model took force. 
  • Your car finance was a personal contract purchase (PCP) – the most common type of car finance, which is a bit like a loan to help you get the car (for more info, read our guide on PCP) – or a hire purchase agreement, which is where you pay off the value of the car in monthly instalments.
  • Your lender and car dealer (acting as a credit broker) had what’s known as a ‘discretionary commission arrangement’ in place – where the higher the interest rate you were charged, the more commission the broker would get.

The FCA investigation will NOT cover complaints where:
 

  • You bought your car using car finance on or after 28 January 2021, when such commission contracts were banned.
  • You have a car leasing agreement (also known as Personal Contract Hire).
  • Your mis-selling claim doesn’t centre on commission. For example, it could instead relate to affordability concerns where the dealership or finance company didn’t check you could afford the loan.

We don’t know yet. The FCA has only said that it will “identify how best to make sure people who are owed compensation receive an appropriate settlement in an orderly, consistent and efficient way”.

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