Mis-Sold PCP Car Finance

Personal Contract Purchase or PCP is a way of buying a car on finance, and after the end of the loan term, you either hand back the car or pay the remaining balance. It has become popular over the last 20 years, with millions of Brits paying for their car this way.

However, one of the ways the deals are set up is through a DCA (Discretionary Commission Arrangement). This allows the salesperson to effectively set the interest rate the customer pays, and by doing so, can increase their commission on the deal.

This is now an issue with both the FCA (who banned this model in 2021) and the FOS, who have issued decisions upholding against the lenders on this practice, stating it was unfair on the customer.

A recent Court ruling at the Court of Appeal could add further strength to the case, where they stated that even set commission rates would come into scope due to brokers not disclosing commission on these arrangements as well.

The FCA has now paused complaints into PCP, allowing lenders more time and the Supreme Court to give a definitive answer on whether or not disclosing commission was detrimental to the customer.

Timeline of Recent Events

UPDATE – 13 November 2024: In late October, a Court of Appeal judgment said commission should be refunded in a much broader range of cases, not just discretionary motor finance. The FCA is now proposing to extend the pause on discretionary commission complaints to cover fixed commissions as well.

UPDATE – 24 September 2024: Following a consultation in August, the FCA announced an extension to the timetable for dealing with PCP complaints and their next steps by May 2025:

• The FCA had originally intended to publish its review setting out next steps in September 2024. This has now been postponed until May 2025 because there is a challenge to the Ombudsman’s decisions on these cases.
• The Judicial Review of the Ombudsman decision is being heard in October 2024, and the FCA hopes for a judgment by the end of 2024.
• This FCA review is likely to lead to new rules, which the FCA will consult on and finalize by December 2025.
• Finance lenders will then have to follow the new approach.
• Because of these delays, consumers who have made a complaint and received a Final Response from the car finance lender now have longer to take their case to the Ombudsman. The FCA says: “If you’re sent a final response between 12 July 2023 and 29 April 2025, you’ll now have until 29 July 2026 to take your complaint to the Financial Ombudsman.”

If you had a PCP arrangement between 2007 and 2021, then we will show you the process to potentially reclaim your money.

Do I Have a Complaint?

If you believe you may have a PCP agreement between 2007 and 2021, then you may be eligible to claim compensation. If you believe commission was not disclosed to you, then you will need to contact the finance provider in order to complain.

How Do I Claim?

If any of the above sounds familiar with your PCP claim, then you need to contact the lender who sold you the finance and complain. To find the information of where to contact, log onto the lender’s website and find the “complaints” section. This will tell you where to write or email with the accompanying address.

Once you have found this information, write your letter of complaint/email using the prompts above to support your case. The bank then has 8 weeks in which to make a decision or tell you why they cannot within that timeframe. If the bank rejects your complaint, you then have the option of referring the complaint to the Financial Ombudsman Service. You can find out how to use their service by clicking on the link below: www.financial-ombudsman.org.uk

However, please remember that the FCA has put a “stay” on all PCP complaints until it fully understands what the courts intend to do. This “stay” is likely to be in place until December 2025.

Data Subject Access Request (DSAR)

If you do not know your car details, then you can send a Data Subject Access Request (DSAR) to the finance provider to obtain this information, allowing them 40 days in which to answer the request. Include as much information about yourself as possible, including your full name, date of birth, address at the time of the account, and anything else you find appropriate, such as the make and model of the vehicle.