Did you buy a vehicle with PCP
or HP before January 2021?
You could be owed compensation if you were mis-sold PCP or HP car finance.
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Could you be eligible for compensation?
Did you know that if you purchased a PCP (Personal Contract Purchase) or HP (Hire Purchase) agreement before 28th January 2021 then you could be owed £1000s as a result of mis-sold finance?
Applicable to those with PCP or HP agreements for cars, vans and motorbikes bought between 2007 and 2021, the FCA (Financial Conduct Authority) have recently launched an investigation into mis-sold car finance. The investigation is looking into unfair, hidden commission that has led to millions of people potentially being overcharged.
Before the cut off in 2021, agreements were in place between finance brokers and car dealerships that allowed those selling the vehicles and the accompanying finance agreements, to benefit from large commission schemes by increasing customer’s interest rates.
Now banned by the FCA (Financial Conduct Authority), these discretionary commission agreements, or DCAs, led to millions of customers being sold PCP and HP finance agreements with unnecessarily high interest rates, of which they were unaware the reason for these rates were due to the dealership’s commission.
How was car finance mis-sold?
For many years before 2021, agreements were in place, known as discretionary commission agreements, between finance brokers and car dealerships. These agreements gave the dealers the discretion to set the interest rate on the finance agreements they were selling and the higher the interest rate, the more commission the dealer would receive.
Car dealers had a duty of care to consumers under the regulations of the Financial Conduct Authority to ensure finance agreements were sold in the consumers’ best interest. They had a responsibility, as they still do, to ensure all agreements were properly explained, information was easy to understand, and that any commission gained by the dealer was explained in a clear and concise way.
It is believed that across many dealers, the above was not happening for a long period of time. The FCA’s investigation uncovers cases of dealers showing bias towards specific PCP and HP agreements that would have the largest commission for them.
If you purchased a motor vehicle on PCP or HP finance before January 2021 you could be owed over £1,000 in compensation!
Finance Providers that are implicated
And many other providers
Have you been mis-sold PCP or HP?
If you purchased a motor vehicle using PCP or HP before January 2021, then you could be eligible for compensation. If any of the below apply to you, it’s likely you can claim.
You bought PCP or HP before January 2021
You were not told about sales commissions
You were told about sales commissions but not how much
You bought PCP or HP before January 2021
Frequently Asked Questions
Here are some of the most asked questions regarding mis-sold PCP or HP finance.
PCP and HP are both types of car finance.
PCP stands for Personal Contract Purchase and is a type of finance agreement that comprises of monthly payments and a final, larger ‘balloon’ payment at the end of the agreement which clears the remaining balance. Once the balloon payment is made, the individual will own the vehicle. Alternatively, individuals can return the car or upgrade to a new vehicle under a new agreements opposed to paying the balloon payment.
HP agreements, standing for Hire Purchase, is a type of borrowing where the money owed is paid back in monthly installments, with no final, larger payment. HP monthly repayments are typically higher than PCP due to their being no end installment. The individual does not own the vehicle until the final payment is made,
Both types of finance agreement are taken out over a period of years with typical durations spanning from 3 - 5 years.
There are multiple ways you can register a claim for mis-sold PCP or HP car finance. If you wish to, you can self-represent and take your claim directly to the lender in question. This can be done using available contact details for your individual lender. Your claim is best submitted to them via email, although each lender may process claims differently and therefore you may be required to submit further information.
Alternatively, you can contact the Financial Ombudsman Service with your claim and they can look into it. However, this is often seen as a step to take after contacting the lender if you’re not happy with the response.
Both of the above options are time-consuming and can become complex, so the simplest way to register your claim is to use a service like ours. We operate a no win, no fee policy, so if your agreements don’t earn you compensation, there’s no fee for our services. We make the process simple and stress-free, taking as much of the work as possible off your shoulders.
Finance agreements are considered to have been mis-sold if the consumer was not given all the information required at the time of purchase, by the dealer, to make an informed decision.
When your PCP or HP agreement was sold to you, if information was hidden, purposefully confused or not disclosed at all, this constitutes a mis-sold agreement.
Examples of finance being mis-sold can include:
- The dealer did not disclose all available finance options, including all available lenders and interest rates
- The dealer did not disclose that they would be receiving commission
- The terms and conditions of the finance contract were not explained at the time of purchase
- The dealer did not conduct the relevant affordability checks
- The dealer showed bias or pressure towards specific finance agreements
- The dealer did not disclose additional fees or charges
If you believe you experienced any of the above between 2007 and 2021, you could have a claim for mis-sold PCP or HP finance and should investigate further.
The amount of compensation you can get for claiming on mis-sold car finance is dependent on a number of factors, including:
- The value of the vehicle
- The length of the PCP or HP agreement
- The interest rate of the agreement
It is reported that the average compensation being rewarded for mis-sold car finance, both PCP and HP, is around £1,600, however, some customers have taken home up to £10,000 in certain cases.
The FCA’s investigation is looking at millions of cases across the UK and it is expected that billions of pounds could be rewarded in compensation, with individual PCP agreements being awarded an average of £3000.
The simple answer is yes, you can claim for multiple mis-sold finance agreements, as long as they all took place between 2007 and 2021.
Each agreement is an individual case as each agreement relates to a different vehicle, potentially one of hundreds of different lenders, one of thousands of different dealers and the situation with each agreement is unique.
If you believe you have multiple agreements which may have been mis-sold, you must ensure you have all the required information needed for a claim available for each individual one clearly. Any confusion in the details of your agreement, such as the vehicle’s registration and the lender, could lead to you missing out on money owed.
Each claim is an individual case and therefore being clear on the information required for each one is essential.
The Financial Conduct Authority are currently investigating the mis-application of discretionary commission agreements within car finance and are due to wrap this investigation up in May 2025.
All claims need to be submitted to the lenders, or the Financial Ombudsman Service, by the end of the investigation to be considered for compensation.
The sooner your case is submitted ahead of the deadline, the better. The Financial Conduct Authority retain the right to move deadlines within their investigations both forward and back, so by submitting your claim now, you guarantee this being reviewed when the deadline is reached.
Keeping up with ever-moving deadlines can be a time-consuming and tiring task, so using a claim management company like us, allows you to sit back and get on with what’s important whilst we handle the hard work of your claim.