Mis-sold Car Finance Claims - Reclaim £1,000's With The UK's Best Car Finance Refund Solicitors

We are the law firm that won the landmark mis-sold car finance case, which led the FCA to launch its investigation into hidden car finance commissions earlier this year.

With our unmatched legal experience in this area of law, we explain your rights to reclaiming £1,000's in compensation for mis-sold car finance.

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What Are Mis-sold Car Finance Claims?

A recent Financial Conduct Authority (FCA) investigation discovered widespread evidence of mis-selling on all types of UK car finance agreements.

Mis-selling occurs when the person buying the car has not been presented with all the information necessary to decide whether the contract represented value for money or was financially viable.

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

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

You can claim for mis-sold PCP personal contract purchase car finance agreements, and for hire purchase car finance agreements, known as HP finance agreements. You can claim for any vehicle, new or used you may have purchased through finance.

The Financial Conduct Authority (FCA) has said that commission was paid on 95% of UK Car finance agreements, and it is estimated that as much as 40% of these agreements may have been mis-sold.

As one car dealer openly admits in a recent article, “frankly, we were getting away with murder. We weren’t treating customers fairly and were, in effect, charging them to earn us money.”

Find Your Car Finance Agreements For Free

Just add a few details and we can validate any car finance agreement you may have had going all the way back to 2007.

We'll then tell you if you can claim and how much you might receive.

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Reclaim Mis-sold Car Finance With Bott and Co

As the UK’s leading solicitors in this area of law, we have won several significant cases, including the pivotal test case of Mrs Young vs Black Horse that have opened the doors to thousands of people reclaiming compensation for mis-sold PCP car finance.

Representing thousands of clients, we have successfully won over 90% of mis-sold car finance claims that have gone to trial since January 2022, with the average compensation payout being over £1,600.

Unlike many claims management companies that have entered the market, we have been at the forefront of developing this area of consumer rights law from the very start and are the only firm to have won cases in court.

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.

Who Can Claim For Mis-sold Car Finance Compensation?

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

The law states that the burden of proof is on the lender and/or the car dealership to show that they acted legally in all aspects of the process. You may be entitled to reclaim money for your car finance agreement if this cannot be proven.

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

  • You can claim if your car was purchased using a personal contract purchase (PCP)
  • You can claim if your car was purchased using a hire purchase agreement (HP)
  • You can claim for all types of vehicles, including cars, vans, trucks, and motorcycles
  • You can claim for both new or second-hand vehicles purchased through finance
  • Claims can be made for agreements that are still active, and payments are being made
  • Claims can be made for 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.

Why Choose Bott and Co?

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    A History of Success

    Successful in over 90% of PCP claims

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    £1,600

    Average compensation amount awarded

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    On Your Side

    We are the only firm taking lenders to court and winning

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    Fully Regulated

    We are members of the Solicitors Regulation Authority. Your claim is in safe hands

Find Out How Much You Can Claim Now

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How Do I Know If I Was Mis-sold Car Finance?

You may be able to claim for mis-sold car finance if you bought a car or motor vehicle through PCP or HP finance between April 2007 and 28th January 2021, and the finance agreement was mis-sold.

Your car finance agreement may have been mis-sold if:

  • The car salesperson did not inform you that they would receive a commission from the lender for setting up the financial agreement
  • The car salesperson did not inform you of all the finance options available, including explaining the differences and responsibilities of each type of product
  • The car salesperson did not inform you, with complete transparency, of the interest rates charged for all finance options and how they may differ
  • The car salesperson did not offer the best interest rate available to you
  • The car salesperson did not adequately explain the details of the financial contract they sold to you, including the Terms and Conditions
  • The car salesperson did not conduct adequate affordability checks or talked you into an unaffordable finance agreement
  • The car salesperson used high-pressure sales tactics or did not give you adequate time to consider the agreement.

It’s the lender or car dealership’s responsibility to prove that they did all of these adequately. If they can’t prove they did all of them, you’ll be entitled to claim for mis-sold car finance.

Mis-sold Car Finance Refunds – How Much Money Could I Reclaim For My Car Finance Agreement?

The exact amount of compensation you may be able to claim for a mis-sold car finance agreement will be dependent on several factors, including:

  • The size of the car finance loan – generally, the larger the loan, the more you’ll be owed and able to claim back
  • The length of your car finance agreement – you’ll be owed more if you’ve been paying the loan for longer
  • The interest rate you paid and the difference between the rate quoted and the rate you should have paid.

What Is The Average Payout For A Mis-sold Car Finance Refund?

The average compensation for a mis-sold car finance claim is estimated to be around £1,600. In some cases, refunds for mis-sold car finance can be as much as £10,000.

How To Calculate The Amount Of Money You May Be Owed For Car Finance

Based on cases we have won, including the landmark case between Mrs Young Vs Black Horse, the compensation payout has been calculated by deducting the difference between the amounts that should have been quoted when the car was purchased and what was actually charged.

The amount you may be able to reclaim will be the difference between these two amounts — the amount you should have been charged if a competitive and fair interest rate had been presented versus the amount in your agreement. In essence, your claim will be for the amount of overpaid interest.

In addition, the Financial Ombudsman Service awards a further 8% interest on the value of the overpayment.

However, in most cases, this is difficult to do as you will not know the interest rate you should have been charged. This is why the FCA’s ruling on the amount of compensation you may be due is so important.

Mis-sold Car Finance Calculator – Check Your Potential Payout

Our calculator below estimates the level of compensation you may be able to claim for a mis-sold car finance agreement.

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

Mis-sold Car Finance Claims Calculator

1 year 5 years
1% 20%
0% 6%

You may have overpaid:

£ 0.00

in interest over 5 years


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 mis-sold 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.

Examples Of Mis-sold Car Finance Claims We've Won

  • Mr P v BMW, In December 2015, Mr P visited an Evans Halshaw dealership and found a Volkswagen Polo that he liked he did not have the money to buy the car so knew that he would need finance.

    Being his first car, he was unfamiliar with the options available to him so he relied on the information given by the salesperson who presented him with a deal from Alphera Finance.

    Unbeknown to Mr P, Evans Halshaw stood to receive a commission payment of £940 for introducing him to Alphera. To make matters worse, Mr P was also unaware that the higher Evans Halshaw set the interest rate, the more commission they would receive for the introduction.

    Being his first car, Mr P reasonably believed that the interest rate was dictated by his financial circumstances and that the dealer had offered him the best deal available.

    Mr P instructed Bott and Co to pursue a claim on his behalf but Alphera denied any wrongdoing. Bott and Co were not deterred and took the case to court, where the Judge found in favour of Mr P.

    It was found that both Evans Halshaw and Alphera failed to put Mr P in a position to make an informed choice by not disclosing that a large commission payment was going to be paid on terms which incentivised Evans Halshaw to inflate the interest rate and as a result, both had breached numerous consumer credit rules. As a result, the Judge concluded that the relationship was unfair.

    The Judge ordered that the commission of £940 be paid by Alphera to Mr P along with interest at 8% from the date of the agreement in 2015 to the date of trial in 2021 – a further £457.

  • Mrs B v BMW. In September 2019, Mrs B was on the lookout for a new vehicle to get to and from work. She visited Ideal Car Centre and found a Mercedes Benz C220 but did not have enough savings to buy the car, which was advertised at £8490. Luckily, the salesman told Mrs B that he had a great relationship with BMW finance and would be able to get me a fantastic deal.

    The salesman took some details and came back with a monthly figure of £184 which was a little bit more than Mrs B expected but he assured me that I would not be able to get a better deal elsewhere. Unbeknown to Mrs B, BMW paid £1,205.89 in commission to a broker, Auto Union Finance who then paid on a portion of that commission to Ideal Car Centre. At no stage was Mrs B made aware of the involvement of Auto Union or the existence of the commission payment at all.

    Mrs B was charged an interest rate of 14.1% APR for the finance. To make matters worse, Ideal Car Centre could have set the interest rate as low as 5.8%. Basically, the higher that the interest rate was set, the more commission Ideal Car Centre would receive for the introduction.

    Mrs B instructed Bott and Co to pursue a claim on her behalf but BMW denied any wrongdoing. Despite all of the above, the Court initially dismissed the claim on the basis that the relationship between Mrs B and BMW was not unfair and that despite BMW being found to have breached the
    regulatory rules, Mrs B had been unable to prove that a loss followed the breach. Not deterred, we requested (and were immediately granted) permission to appeal.

    The case went to an appeal hearing at Liverpool County Court in December 2021 and we won.

    The appeal judge found in our favour on all 3 grounds, namely that (1) the trial judge should have assessed the fairness of the relationship on the basis of what Mrs B would have done had she actually known about the undisclosed commission, not on the basis of what she did when left in ignorance of the commission arrangement, (2) that BMW could have disclosed the commission arrangement to Mrs B, even if they didn’t know the exact amount at the time, and (3) that the trial judge was wrong to find that there had been no loss for BMW breaching the regulatory rules.

    The appeal judge awarded the ‘unfair interest’, which she considered to be the difference between the interest rate Mrs B had been charged (14.1% APR) and the lowest rate available (5.8%), a total of £1,486.08. She also awarded 2% interest on top from the start of the agreement – a further £69.

  • In September 2018, Miss W visited an Arnold Clark car dealership and purchased a Ford Kuga.

    She part-exchanged her previous vehicle and used part of the trade in price to pay off the outstanding finance on that vehicle and used the balance as a deposit towards the Ford Kuga.

    The rest of the purchase price was financed by a hire purchase agreement meaning that Miss W borrowed £15,492 payable by 47 monthly payments of just under £250 and a balloon payment of over £7000. The interest charges on the agreement therefore amounted to just under £3500.

    In return for introducing Miss W to BMW, Arnold Clark received a commission payment of just over £1350 but Miss W was never told about this commission arrangement.

    Miss W instructed Bott and Co, who brought a claim on the basis that BMW had breached the FCA’s regulatory rules and guidance (‘CONC’) and that the relationship was unfair.

    It transpired that BMW, who were willing to lend the money at an interest rate as low as 5.2% APR, allowed Arnold Clark to set the interest rate much higher in order to receive more commission.

    Unsurprisingly, Arnold Clark picked a higher interest rate (7.7% APR!) meaning that instead of Miss W having to pay £225 per month, her monthly payments were inflated to just under £250.

    This type of commission structure is so obviously unfair to consumers that when the FCA became aware of the widespread practice it was banned with effect from 28 January 2021.

    BMW defended the claim all the way to Trial but, unsurprisingly, the Deputy District Judge at Carlisle County Court concluded that the relationship between Miss W and BMW was indeed unfair within the meaning of s.140A of the Consumer Credit Act 1974 and ordered BMW to repay the amount of the commission payment to Miss W in the sum of £1,351.99 plus interest for a period of 1,266 days (i.e. from the date that the agreement started) at 2% which amounted to a further £93.79.

  • In October 2015, Mrs J decided that after 2 years of owning a Vauxhall Corsa, she fancied upgrading to a larger and more expensive car, a Vauxhall Mokka, but was resigned to buying one that was second hand as she could not afford the monthly repayments on a new Mokka.

    The trade in price for her Corsa was about £8000, but £8300 was due on the existing finance agreement made 2 years earlier, so she had to put in £300 to clear settle that agreement.

    Arnold Clark presented Mrs J with a PCP finance deal from Alphera Financial Services which would mean that Mrs J had to borrow just over £15,000 over a period of 48 months at a monthly payment of just over £285 with a final balloon payment of just under £6,000.

    Mrs J wasn’t familiar with the concept of interest, but having been told that she was getting a great deal and deciding that the monthly payments were affordable, she agreed to go ahead.

    What Mrs J was not aware of was that there was a secret commission arrangement between Arnold Clark and Alphera that meant that in return for introducing Mrs J to Alphera, Arnold Clark received a commission payment of just over £1600 – Mrs J was never told about this arrangement.

    Mrs J instructed Bott and Co to pursue a claim on her behalf and having issued legal proceedings, it became apparent that there was a commission arrangement between Arnold Clark and Alphera which enabled Arnold Clark to increase the interest charged to earn itself greater commission.

    Unsurprisingly, Arnold Clark exercised the discretion afforded to them by inflating the interest rate meaning they received a higher commission payment which unbeknown to Mrs J, meant that she would have to pay an additional £2000 in interest over the lifetime of the agreement.

    The Financial Conduct Authority has taken a dim view of this sort of discretionary commission arrangement to the extent that such arrangements are now banned, as of January 2021.

    Alphera denied any wrongdoing but Mrs J was successful at Blackpool County Court – the Deputy District Judge agreed that Mrs J had been burdened with the effective cost of the commission by having potentially paid a higher rate of interest and ordered repayment of the commission amount of £1608.03 plus interest at the lowest rate available on the commission
    arrangement between Arnold Clark and Alphera of 2.9% from the date of the agreement to the date of trial.

What Are The Most Common Types Of Mis-sold Car Finance Claims?

From the thousands of mis-sold car finance claims we have processed, the most common types of miss-selling are:

Discretionary Commission Arrangements

As part of your car finance agreement, the lender must disclose all fees and commissions between themselves and the car dealer. If you are not informed, this is classed as an undisclosed or hidden commission.

Equally, if the salesperson or broker does not clarify that they or the dealership would receive a commission for introducing you to the lender, this is a hidden commission.

It is a car dealership’s legal responsibility to explain the existence of any commission or fee, including the amount they may receive.

Most of our clients who were mis-sold car finance agreements were completely unaware that the car dealership received a commission for simply introducing you to a finance company they chose. It is estimated that 40% of all car financing agreements included a discretionary commission arrangement.

Inflating Interest Rates To Get More Commission

Despite having permission from the lender to offer a lower interest rate, car salespeople offered finance agreements at a higher interest rate to the customer so that they would receive a larger commission. Following the FCA investigation, this is now banned.

Not Explaining All Financing Options To The Customer

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, not 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.

Not Disclosing Who Owns The Car At The End Of The Finance Agreement

Additionally, you may have been mis-sold your car finance if the salesperson failed to clarify your position at the end of the agreement, such as if you would own the car or whether a final balloon payment would be due and the amount that would be payable.

Not Carrying Out Affordability Checks

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.

What Are Discretionary Commission Arrangements?

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 car finance.

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.

What Is The Mis-sold Car Finance Claims Process?

There are a number of options available to you to make a mis-sold car finance claim. You can approach the lender directly and request a refund or go to the Financial Ombudsman Service (FOS).

Alternatively, you can use Bott and Co. Our mis-sold car finance claims are offered on a no win no fee basis, meaning you are at no financial risk to making a claim.

As this is a new area of law, it is unsurprising that lenders are challenging the rulings around mis-sold car finance. However, Bott and Co have won a number of significant cases that have disproved their argument.

Simple Claim Process

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

Can I Make A Mis-sold Car Finance Claim Myself?

Yes, you can make a claim directly with the lender if you feel you may have been mis-sold.

We provide two resources to help you in this process. First, you can use our free mis-sold finance claims calculator to find your car finance agreements.

We then can provide you with a free mis-sold car finance template letter that you can download and send to the finance provider.

Which Car Makers Can I Make A Mis-sold Car Finance Claim Against?

Many mis-sold car finance 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 Mis-sold Car Finance Claim Against?

We have 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
  • NIIB Group Ltd
  • PSA Finance UK Ltd
  • RCI Financial Services Ltd
  • Santander Consumer (UK) PLC
  • Startline Motor Finance Ltd
  • Toyota Financial Services (UK) PLC
  • Vauxhall Finance PLC
  • Volkswagen Financial Services (UK) Ltd

How Far Back Can I Make A Mis-Sold Car Finance Claim?

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’ is the commission payment, i.e. the start of the agreement. So you certainly have 6 years from the beginning of your agreement.

If your agreement is older than this, you can still 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.

How Long Does A Mis-sold Car Finance Claim Take?

If the lender paid a Discretionary Commission Arrangement for your agreement, the complaint will be paused until 4th December 2025.

After that date, the lender has a further 8 weeks to respond to confirm whether they agree to pay compensation.

If the lender paid a commission but it wasn’t a Discretionary Commission Arrangement, then the case is affected by a decision called Johnson v Close Brothers, which is currently being appealed to the Supreme Court, so these will also be on hold.

Frequently Asked Questions On Mis-sold Car Finance Claims?

Why Is The Court Of Appeal Decision In Johnson vs Close Brother Important?

Bott and Co represented Mr Johnson in this case. The decision is important because based on the ruling, the FCA has announced that their consultation should extend to all types of commission arrangements. Previously the scope related only to discretionary commission arrangements. This broader view extends to the consultation to all arrangements, potentially vastly increasing the number of people who may have a right to claim.

Is The Recent Court Of Appeal Decision Likely To Affect The Original Discretionary Commission Agreements Decision?

Yes, the recent Court of Appeal decisions affects all motor finance agreements where commission has been paid, regardless of how that commission was calculated. It’s therefore likely that all claims will be paused (and therefore delayed further) pending an answer from the Supreme Court.

Following The Recent Court Of Appeal Decision, If My Previous Complaint Was Rejected By The Lender, Should I Resubmit My Complaint?

If the lender has rejected your complaint, then it has been closed by them and will not be re-opened without further input. It would therefore be advisable to submit the complaint again.

When Will The FCA Make A Decision On All Mis-Sold Car Finance Claims?

At the start of their investigation in January 2024, the FCA said they would make a decision in September 2024. However, as the investigation continues, they have pushed back the date to May 2025 and now to December 2025.

When Did The FCA Ban Discretionary Commission Arrangements?

The Financial Conduct Authority banned discretionary commission arrangements in January 2021 following their initial investigation into how car finance agreements were sold to consumers.

Does The Finance Agreement Have To Be Paid Off, Or Can I Still Claim If The Loan Is Still Ongoing And Active?

You can make a mis-sold car finance claim if the finance agreement is still active or has already been paid off. We can check and validate any agreement for you if you have paid something for it within the last six years.

Can I Claim If I Bought A Used Car Using Finance?

Yes, you can also claim for mis-sold car finance for used cars. You can claim as long as you entered into a finance agreement to purchase your vehicle, and we can prove you were mis-sold.

Will I Get Blacklisted By Lenders If I Make a Mis-sold Car Finance Claim?

No, lenders cannot blacklist you or treat you any worse as a result of making a complaint.

Can I Make A Mis-sold Car Finance Claim If I Had Finance Through A Lease Agreement And/ Or Personal Contract Hire?

While the car finance mis-selling scandal has previously only related to ‘discretionary commission arrangements, the recent Court of Appeal case of Johnson v Close Brothers suggests that consumers with leases can also claim.

Can I Claim For Vehicles I Also Use For Business Purposes?

You can only claim for vehicles primarily for personal reasons; however, commuting does count as personal use.

Can I Make a Mis-sold Car Finance Claim For More Than One Vehicle?

Yes, you can make a claim for each separate agreement you entered where you think you may have been mis-sold.

Can I Make a Mis-sold Car Finance Claim If The Lender Has Gone Out Of Business?

If the lender has gone bust, you can no longer claim against them. However, you may still be able to claim from the dealer or broker that arranged the finance for you. Our specialist lawyers can advise you further on this.

I Can’t Find Any Of My Paperwork For My Car Finance Agreements, Can I Still Claim?

You can still make a claim. In fact, almost of our clients come to us without any previous paperwork. Just add your details to our mis-sold car finance claim checker and we’ll validate all your agreements for you. Alternatively, Consumers can indeed try it for themselves first and in fact Bott and Co offer a free template letter.

I Can’t Remember My Number Plate And It’s Over 6 Years Ago, So I Have Nothing On My Credit File. How Do I Claim If I Don’t Have Any Information On My Agreements?

You can still make a claim. We have tools, such as our car finance claim agreement finfer which can locate your finance details without you needing to remember your registration number, agreement number, or the name of your lender.

I Don’t Know Who The Lender I Financed My Car Is, Can I Still Claim?

Yes, you can still claim. We have built a free mis-sold motor finance claims checker that will search your credit record for any motor finance agreements you’ve had in the past six years.

Can I Claim If I Bought A Car And Used A Personal Loan Instead Of A Car Finance Loan?

Unfortunately, we cannot claim on your behalf in this instance.

I’ve Made A Claim Directly With The Lender, But I Haven’t Had A Response. What Should I Do?

If you have submitted your letter of complaint directly to the lender under the DISP rules (Dispute Resolution Complaints), the lender has up to eight weeks to respond.

How Do We Know Car Finance Mis-Selling Has Been Taking Place In Car Dealerships Across The UK?

In 2021, a Financial Conduct Authority (FCA) investigation discovered widespread mis-selling of car finance agreements.

Unbeknown to customers, lenders systematically incentivised brokers and car dealers to charge their customers higher interest rates so they could receive higher commissions themselves.

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 £1,600 more in interest through a PCP agreement than through a different financing plan.

Jonathan Davidson, director of supervision for retail and authorisations at the FCA, said the actions discovered were unacceptable.

“Some motor dealers are overcharging unsuspecting customers over £1000 in interest charges to obtain bigger commission payouts for themselves.”

As a result of the investigation, the FCA banned commissions linked to car finance in June 2021. The FCA estimates the move will save consumers around £165 million a year.

An industry article in Autocar contained several shocking and brazen quotes from anonymous car dealers detailing their practices.

One dealer said, “I’ve been doing this work for 38 years, and, frankly, we were getting away with murder. We weren’t treating customers fairly and were, in effect, charging them to earn us money. The FCA’s ban means all the wheeling and dealing is over. It’s not trying to stop us from earning money – just from taking the p*ss.”

Another dealer said their agreements with their lenders “let us car salesmen adjust the interest rate on customer loans to boost our commission.

Depending on the value of the deal and the APR we were able to get away with, this commission – after the dealership had taken its cut – could equal what we earned on the sale of the car itself.

Our customers knew none of this, of course. They assumed that our frantic tappings (on our keyboards) were an effort to secure them the most favourable lending terms.”

Commenting on the article, our lead solicitor in the consumer claims department at Bott and Co, Coby Benson, said, “It is estimated that hundreds of thousands of motorists might have been mis-sold finance packages, costing consumers up to £300m a year.

These cases stand out because the perpetrators knew full well that they were misguiding trusting customers for their own financial gain.”

What’s The Difference Between PCP Car Finance and Hire Purchase?

The Finance & Leasing Association (FLA) estimates that 80% of all new cars are financed through personal contract purchases or PCP finance. PCPs are extremely popular as they are considered a more cost-effective way of buying a new vehicle.

Similar to a hire purchase financial loan, PCP plans are most commonly structured as an upfront payment followed by a series of monthly payments.

However, the main difference between a hire purchase (HP) arrangement and a PCP arrangement is that the loan is based on the expected amount of depreciation in the car over the contract’s length, making it more cost-effective for many consumers. They then can make a final “balloon” payment at the end of the agreement to own the vehicle.

However, it has been discovered that part of the loan payments relate to the “balloon payment, ” the final amount you may choose to pay to purchase the car outright. In effect, this is an interest-only loan, meaning interest charges accumulate much quicker, leaving anyone who decides to buy the vehicle at the end of the contract paying a much higher amount than if they had purchased the car through hire purchase.

For a loan of £10,000 over four years, it is estimated that a consumer may have overpaid as much as £1,600.

The NACFB believes car dealerships are responsible for clarifying this when discussing finance options with customers at the initial point of purchase.

Additionally, there are concerns about how dealers may refer to any difference between the expected value and the car’s actual value at the end of the load period as “profit” or “equity.”

Any “profit” is the amount of money the buyer borrowed more of and paid more interest than was necessary to cover the vehicle’s expected depreciation.

Find Your Car Finance Agreements For Free

Just add a few details and we can validate any car finance agreement you may have had going all the way back to 2007.

We'll then tell you if you can claim and how much you might receive.

START INSTANT CLAIM CHECK