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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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 CHECKWhen 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.
Claim For Mis-sold Car Finance With Bott and Co
How Do I Know If I Was Mis-sold My PCP Finance Agreement?
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.
Why Choose Bott and Co?
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A History of Success
Successful in over 90% of Mis-sold car finance 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
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.
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 £1,600. 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 claim amounts can vary from £500 for smaller agreements, up to and over £10,000 for larger PCP agreements that were mis-sold.
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.
Mis-sold Car Finance Claims Calculator
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 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:
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.
Mis-sold Car Finance Timeline
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Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations at the FCA, said: “We found that some motor dealers are overcharging unsuspecting customers over a thousand pounds in interest charges in order to obtain bigger commission pay-outs for themselves. We estimate this could be costing consumers £300 million annually. This is unacceptable and we will act to address harm caused by this business model.
Following an investigation into the selling of car finance agreements The FCA uncovered widespread mis selling of finance agreements in the motor industry. The investigation discovered that unbeknown to customers, lenders systematically incentivised brokers and car dealers to charge their customers higher interest rates so they could receive higher commissions themselves.
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Christopher Woolard, the FCA’s Interim Chief Executive, said:
'By banning this type of commission, where brokers are rewarded for charging consumers higher rates, we will increase competition and protect consumers.
'We estimate that consumers could save £165 million because of today’s action.'
The FCA will also make changes to the way in which customers are told about the commission they are paying to ensure that they receive more relevant information.
These disclosure changes apply to many types of credit brokers and not just those selling motor finance. These changes will also come into force on 28 January 2021.
Read the report
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The FOS concluded that the commission payment constituted an unfair relationship between our client, Mrs Young and Black Horse and that Black Horse had violated various FCA customer fairness rules. This decision has opened the doors to millions of similar complaints against many different lenders.
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The Financial Conduct Authority launches an investigation into the mis-selling of car finance, specifically looking at hidden discretionary commission arrangements, known as DCAs. These agreements enable brokers and dealers to choose from a range of interest rates to offer the consumer, in turn helping them earn inflated commissions. A decision is scheduled for September 2024
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To prevent inconsistent outcomes, the FCA paused the 8-week deadline for firms to respond to DCA complaints. On 30 July 2024, the FCA proposed extending this pause until 4 December 2025, as it now expects to announce next steps—including the possibility of a redress scheme—by May 2025, after completing its data analysis and awaiting the outcome of legal proceedings, including a judicial review brought by Barclays. Firms will not be required to respond to DCA complaints during the pause. However, consumers can still submit complaints, and proposed changes may give them until 29 July 2026 or 15 months from the firm’s final response (whichever is later) to refer complaints to the Financial Ombudsman.
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Clydesdale Financial Services Ltd (trading as Barclays Partner Finance) sought judicial review of a January 2024 Financial Ombudsman Service (“FOS”) decision upholding Ms Lewis’s complaint. At issue were (1) whether the Ombudsman mis applied CONC disclosure rules and the Consumer Credit Act agency provisions, and (2) whether his process was procedurally fair. Over three days of rolled up proceedings, the parties explored FCA Handbook rules on differential commission, the adequacy of disclosure to Ms Lewis, and Clydesdale’s grounds for challenge, including reliance on expert evidence
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In all 3 cases the Court of Appeal found the lender liable to the consumer for paying a commission to the broker without the consumer’s knowledge or informed consent. In the ruling, it was noted that consumers should know all the material facts that could affect their borrowing decision including the total commission to car dealers, and how it was calculated, in order to be able to consent to the commission payment being made.
The ruling extends the rights of consumers beyond discretionary commission agreements and means that anyone affected by any type of hidden commission payment could be potentially owed compensation.
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The FCA will consult on 2 options for extending the time firms have to provide final responses to motor finance complaints involving a non-discretionary commission arrangement:
Option 1 – 31 May 2025, reflecting how long it may take to hear whether the Supreme Court has granted permission to appeal as the FCA plans to set out its next steps on DCA complaints in May 2025.
Option 2 – 4 December 2025, to align with the current rules for motor finance firms dealing with discretionary commission complaints. This change is meant to give companies time to properly investigate and resolve cases, ensuring fair outcomes for consumers.
The proposed extension ensures firms handle complaints fairly and consistently
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The initial date of a decision has been scheduled for September 2024, but this has been pushed back to May 2025.
The consultation period will likely coincide with a pivotal court case, which could significantly impact the FCA’s final decision.
To provide the FCA with more time to consider a potential redress scheme, which may not be implemented until December 2025.
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The Court dismissed Clydesdale’s challenge in full. He held that (a) the Ombudsman’s interpretation of CONC 4.5.3R and related FCA guidance was lawful, (b) the commission arrangement with Arnold Clark should have been more fully disclosed, and (c) there was no procedural unfairness in the FOS process. Permission was granted to appeal on all three grounds, and Clydesdale was ordered to pay the FOS’s costs.
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The Financial Conduct Authority (FCA) has confirmed it may consult on an industry-wide redress scheme for motor finance customers who were mis-sold their car finance agreements. The FCA will announce the next steps for complaints six weeks after the Supreme Court hearing decision is announced
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The Supreme Court considers whether to uphold or overturn the Court of Appeal's decision of October 2024, that all hidden commission payments, not just discretionary commission arrangements, were unlawful.
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The FCA releases information on the framework for a potential redress scheme. It suggests there may be options for opt-in and opt-out dependent on circumstances. However, full details on the type of claims consumers may be able to claim for will not be released until after the Supreme Court ruling on discretionary commission arrangements is announced.
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Following submissions from all parties the Court decided to adjourn the appeal until September 2025, deferring its judgment pending the Supreme Court’s forthcoming decision in Johnson v FirstRand Bank Ltd which may bear on principle and remedy
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The Supreme Court will rule on the appeal case of Johnson, Wrench and Hopcraft against Close Brothers Ltd and FirstRand Bank Ltd on Friday August 1st at 4.35pm.
Frequently Asked Questions On Mis-sold PCP Claims
Can I Make a PCP Claim For More Than One Vehicle?
Yes, you can make a claim for each separate PCP finance agreement you entered where you think you may have been mis-sold.
Can I Make a PCP 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 PCP agreement.
I’ve Already Made A PCP 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.
If I Make A PCP Claim. Will It Affect My Credit Rating?
No, making a mis-sold PCP claim will not negatively affect your credit score. Your claim is in relation to how the agreement was sold to you, not whether you’ve made your payments.
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 £1,600 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.
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