PCP Claims - Claim Compensation For Your Mis-sold PCP Finance Agreement

What Is A PCP Claim?

You may have a legal right to make a PCP claim if you think you were mis-sold a personal contract purchase (PCP) finance agreement when purchasing your vehicle.

You may be able to claim for a mis-sold PCP car finance agreement if the salesperson failed to give you all of the information about your agreement, misled you, or did not explain to you about any commissions or interest being charged as part of the agreement.

A PCP agreement is considered to be mis-sold if the buyer was not given all the information needed to assess whether the contract was financially viable or offered good value for money.

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When Can I Make A PCP Claim?

You are eligible to claim compensation for a mis-sold PCP finance agreement if the salesperson failed to present all finance options, adequately explain the details of your PCP contract, and the interest rates charged, make affordability checks or inform you if they would receive a commission.

The law requires the lender or car dealership to prove that they acted lawfully throughout the entire process, ensuring they had the customer’s “fully informed consent.”

If they cannot prove this, you may have the right to make a PCP claim for your mis-sold car finance agreement.

Mis-sold PCP claims can be made in the following instances:

• PCP finance claims apply to all types of vehicles, including cars, vans, trucks, and motorcycles
• You can claim for both new and used vehicles purchased through PCP financing
• Claims can be made for active PCP agreements with ongoing payments
• PCP Claims can also be made for PCP agreements that have ended, even if the vehicle has been fully paid off
• Multiple vehicles can be included in a single PCP claim
• You may still be able to make a PCP claim if the vehicle was repossessed.

How Do I Know If My PCP Finance Agreement Was Mis-sold?

The FCA investigation reported that mis-selling of PCP finance agreements was widespread, so if you purchased a car, van, or motorcycle on PCP between 2007 and January 2021, there is a distinct possibility that you have been mis-sold.

As consumers were unaware they were the victim of mis-selling, it is difficult to know for sure that every agreement was mis-sold. However, it is the responsibility of the lender to prove that mis-selling did not take place.

Some of the most common types of PCP mis-selling for car finance agreements include:

Inflated, Unfair Interest Rates

According to the FCA investigation, consumers on average may have paid £1,100 more interest than necessary due to inflated interest rates set by a discretionary commission arrangement between the lender and the dealer.

When purchasing a vehicle through PCP finance, it is expected that a consumer will pay an interest rate on the loan, and that this rate is fixed. However, due to the discretionary commission arrangements, dealers and brokers were able to create larger commission fees for themselves by offering consumers inflated interest rates.

Undisclosed Commissions

As part of your PCP agreement, the lender must disclose all fees and commissions between themselves and the car dealer, including how much commission they may receive.

If you are not informed, this is classed as an undisclosed or hidden commission.

It is estimated that 40% of all car financing agreements included a discretionary commission arrangement.

Undisclosed Relationships

Dealers and brokers should disclose their commercial relationships with lenders, and explain any conflicts of interest or if they would receive a commission for introducing you to the lender.

Not Carrying Out Affordability Checks

The dealer or broker is bound by the FCA’s Consumer Credit sourcebook (CONC) guidelines to check that you can afford the loan payment before you sign the PCP agreement.

Many customers have entered into car finance agreements that they may not be able to afford because adequate affordability checks were not carried out.

You may have been mis-sold if you felt trapped in a long-term financial agreement that you could not afford to pay due to the negligence of the car salesperson not conducting affordability checks. You may be able to claim if you struggled to make the monthly payments, went into debt, or missed other financial payments to prioritise your car repayments.

Not Providing All Financing Options

Car salespeople are legally responsible for explaining all the finance options available when purchasing a car. This includes the difference in the cost of a PCP agreement compared to an HP agreement, telling you about any other finance options available, what you may owe at the end of the finance agreement, and any hidden extras added to your contract for things such as insurance, service contracts, or costs for exceeding the mileage limit.

Simple Claim Process

• Add your details to our claim checker
• We will confirm if you were mis-sold
• We will negotiate a settlement with the lender
• You receive the compensation you are due.

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How Do I Know If I Can Make A PCP Claim?

You may be eligible to make a PCP claim if you purchased a car or motor vehicle through PCP financing between April 2007 and January 28, 2021, and the agreement was potentially mis-sold.

You may be able to make a PCP claim if your agreement was mis-sold. If you experienced any of the following when purchasing your vehicle through PCP, you may be able to claim compensation.

• The salesperson did not disclose that they would receive a commission from the lender for arranging your PCP finance agreement
• The salesperson failed to inform you of all available finance options, including explaining the differences and responsibilities of each type of PCP product
• The salesperson did not fully disclose the interest rates available for all PCP finance options and how these rates might vary
• The salesperson did not offer you the cheapest interest rate available to you for your PCP agreement
• The salesperson did not thoroughly explain the PCP finance contract’s details, including all Terms and conditions
• The salesperson did not conduct proper affordability checks during the application process
• The salesperson either applied high-pressure sales tactics or failed to give you enough time to consider whether the PCP agreement was right for you.

It is the responsibility of the lender or car dealership to prove that they adequately fulfilled all of these obligations. If they cannot, you may have the right to make a PCP claim.

What Types Of PCP Agreements Can I Claim For?

Mis-sold PCP claims can be made for all of the following types of PCP agreements:

• You can claim for all types of vehicles, including cars, vans, trucks, and motorcycles
• You can claim for both new and second-hand vehicles purchased through PCP finance
• Claims can be made for PCP agreements that are still active, and payments are being made
• Claims can be made for PCP agreements that have ended, and the vehicle has been paid off
• You can claim for multiple vehicles at the same time
• You can claim even if the vehicle was repossessed.

How Much Can I Claim For A Mis-sold PCP Agreement?

The level of compensation you may be able to claim for a mis-sold PCP agreement is based on several factors, including:

• The price of the car. In most cases, the higher the value of the car, the larger the PCP loan may be
• The amount of deposit you put down when entering into the PCP agreement. If your deposit was reasonably small, the PCP loan agreement may have been higher
• The amount agreed within your PCP finance loan — generally, the larger the loan, the more you may be able to reclaim
• The duration of your PCP finance agreement — If your agreement is spread out over a longer period, you may be owed more
• The interest rate you paid and the difference between this rate and the rate you should have been offered.

Furthermore, the Financial Ombudsman Service awards an additional 8% interest on the overpayment amount.

However, determining the appropriate interest rate can be challenging, as you may not know what rate should have been offered to you.

What Is The Average Compensation Payout For A PCP Claim?

The average compensation amount received for a PCP claim is approximately £1000. Since 2022, we have successfully won over 90% of claims for mis-sold PCP finance agreements.

However, the amount of compensation you may receive will be unique to your circumstances and will depend on the size and length of the term of your PCP agreement.

PCP Claims Calculator – Check Your PCP Claim Amount

Our calculator below estimates the amount of compensation you may receive when making a PCP claim.

Add the value of your vehicle, the number of years of your agreement, and the interest rate you paid. Then, compare this against a rate you may have been offered if you weren’t mis-sold.

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Please note that this calculator only provides a rudimentary calculation of how much extra interest has been paid on a Hire Purchase agreement. The calculation will be different for PCP agreements and does not factor in the actual length of the agreement or any compensatory interest which may be awarded.

The calculation is illustrative, and under no circumstances should it be used or relied upon in the pursuit of a claim. If in doubt, please take legal advice from a firm with suitable expertise, such as Bott and Co.

What Types Of Car Finance Mis-selling Can I Make A PCP Claim For?

From the thousands of PCP claims clients we have represented, the most common types of car finance mis-selling are:

• Hidden Discretionary Commission Arrangements
• Inflating Interest Rates To Get More Commission
• Not Explaining All Financing Options To The Customer
• Not Disclosing Who Owns The Car At The End Of The Agreement
• Not Carrying Out Affordability Checks

What Are Discretionary Commission Arrangement PCP Claims?

Discretionary commission arrangements, sometimes known as DCAs, were a commission model that allowed lenders to authorise brokers to adjust the interest rates they offered customers for PCP car finance agreements.

The broker was incentivised to increase their commissions by charging the customer a higher interest rate than necessary. The Financial Conduct Authority (FCA) banned DCAs in January 2021.

Which Makes Of Cars Can I Make A PCP Finance Claim Against?

Many mis-sold PCP claims will be against the banks or lenders who have agreements with the car makers.

However, if you think you have a right to claim, you can claim against any car maker. We have ongoing litigation or have settled cases against well-known car companies such as Audi, BMW, Hyundai, Kia, Mercedes-Benz, Toyota, Vauxhall, and Volkswagen.

Which Lenders Can I Make A PCP Claim Against?

We have PCP claims in progress against a large number of lenders, including:

• Black Horse Ltd
• Blue Motor Finance Ltd
• BMW Financial Services (GB) Ltd
• CA Auto Finance UK Ltd
• Close Brothers Ltd
• Clydesdale Financial Services Ltd
• FCE Bank PLC
• FirstRand Bank Ltd (London Branch)
• Hyundai Capital UK Ltd
• Mercedes-Benz Financial Services UK Ltd
• Moneybarn No. 1 Ltd
• Notonovo
• NIIB Group Ltd
• PSA Finance UK Ltd
• RCI Financial Services Ltd
• Santander Consumer (UK) PLC
• Stellantis Finance
• Startline Motor Finance Ltd
• Toyota Financial Services (UK) PLC
• Vauxhall Finance PLC
• Volkswagen Financial Services (UK) Ltd

How Far Back Can I Make A PCP Finance Claim?

The amount of time you have to make a PCP claim will depend on the specific regulations and statutes of limitation when the PCP agreement was signed.

Under the Limitation Act 1980, you have up to six years from the date of the agreement to make a PCP car finance claim.

Additionally, under Financial Ombudsman Service rules (DISP 2.8.2), you have a maximum of 6 years from the event complained of or 3 years from when you become aware that you had cause to complain.

The ‘event of complained of’ relates to the commission payment, i.e. the start of the agreement.

If your agreement is older than this, you can still make a PCP claim if you only became aware of the right to complain within the last three years.

However, it is unlikely that you’ll be able to claim for agreements that ended before 2007.

Make A PCP Car Finance Claim With Bott and Co Solicitors

As the UK’s leading solicitors in PCP claims, we have won several significant landmark cases, including the pivotal test case of Mrs Young vs Black Horse, which has opened the doors to thousands of people reclaiming compensation for mis-sold PCP agreements.

We have spent millions in litigation, representing the rights of car finance consumers, and have won numerous test cases that have set a precedent for everyone who may have been mis-sold to have the right to claim, whether Bott and Co. represent them or not.

How Do We Know PCP Mis-Selling Took Place?

In an investigation in 2021, the Financial Conduct Authority (FCA) discovered extensive evidence of car finance mis-selling on all types of UK car finance agreements, including PCP car finance.

As part of the investigation, the FCA sent mystery shoppers to 122 car retailers throughout the UK to discover:

• Of the 122 retailers, only 11 told their customers the dealership might receive a commission for arranging the deal
• Only 31% of brokers explained to PCP finance customers that they do not own the car until all sums (including a balloon payment) have been paid
• Just 28% of brokers disclosed the total amount payable and explained the consequences of a missed payment or withdrawal from an agreement
• On a typical motor finance agreement of £10,000, a customer may have been charged £1,100 more in interest through a PCP agreement than through a different financing plan.

What Is PCP Finance?

Personal Contract Purchase (PCP) agreements are one of the most common and popular ways to finance the purchase of a new car. A PCP finance agreement is usually structured with an initial deposit payment, followed by a series of monthly payments over the length of the agreed term of the contract, followed by a final “balloon” payment.

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