PCP Claims & Mis Sold Car Finance Claims

Bought a car since 2007 using finance? You may have been mis-sold and could be owed thousands of pounds in compensation.

With our unmatched experience in this area of law, we explain your rights to reclaiming £1,000's in compensation. Use our free reclaim tool to find out how much you may be able to claim.

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What Are Mis-sold Car Finance PCP 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 PCP 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.

The Financial Conduct Authority (FCA) have said that commission was paid on 95% of UK Car finance agreements. If you weren’t told the exact amount of commission paid then you may have a claim.

The FCA 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.

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.”

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 pay out over £1,600 in compensation.

Find Out How Much You Can Claim Now

Just add a few details to our claims checker for us to find your car finance agreements. We'll then tell you if you can claim and how much you might receive.

Check your car finance agreements now for free.

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Who Can Claim PCP Mis-sold Car Finance Compensation?

You may be able to claim for mis-sold car finance if you bought a car through PCP or HP finance since 2007 and the finance agreement was mis-sold.

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.

In addition, mis-sold car finance claims can be made under the following circumstances:

  • You can claim for new or second-hand vehicles purchased through finance
  • You can claim for all types of vehicles, including cars, vans, trucks
  • Claims can be made for agreements that are either still in place or for agreements that have ended.
  • You can claim for multiple vehicles at the same time.

How To Check If You Have Been Mis-sold Car Finance

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.

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

  • The car salesperson did not inform you 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.

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

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How Much Compensation Could I Claim For Mis-Sold PCP Car Finance?

The average compensation for a mis-sold car finance claim is estimated to be around £1,600. In some cases, the amounts have been more than £3,000.

How Is Compensation Calculated For Reclaiming Mis-sold PCP Car Finance Claims?

The exact amount of compensation you may be able to claim will be dependent on several factors. Compensation for mis-sold car finance is calculated based 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.

Claims for mis-sold car finance can be made for all types of motor vehicles, such as cars, vans, trucks, SUVs and 4X4s.

Examples Of PCP 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 Is The Mis-sold Car Finance Claims Process?

There are a number of options available to you to make a mis-sold PCP 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.

Bott and Co remain at the forefront of this new and developing area of consumer law and have an evergrowing track record of winning these cases at Court.

Find Out How Much You Can Claim Now

Just add a few details to our claims checker for us to find your car finance agreements. We'll then tell you if you can claim and how much you might receive.

Check your car finance agreements now for free.

START INSTANT CLAIM CHECK

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:

Undisclosed Or Hidden Commissions

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.

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.

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 to explain 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 Hidden Commissions?

When you purchase a car on finance, it is a bank or lender, not the car dealership, lending you the money to finance the loan for the vehicle.

If the salesperson 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 that they may receive.

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 Claim Myself?

We can provide you with a free mis sold car finance template letter to download for you to send directly to the car dealership or finance provider.

If you think you’ve a valid complaint, the process of making it is quick, simple and to help, you can use our template letter

Alternatively, add a few details into our free claims checker to get an instant decision.

Frequently Asked Questions On Mis-sold Car Finance PCP Claims?

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

Many of the claims will be against the banks or lenders who have agreements with the car makers. However, you can claim against any car make, and we have settled cases against well-known car companies such as BMW, Audi, Mini, VW Volkswagen, Kia, and Toyota.

Which Lenders Can I Make A Mis-sold PCP Finance Claim Against?

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

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

How Far Back Can I Make A PCP 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 ought to have reasonable become aware that you had
cause to complain.

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

If your agreement is older than this then you can still claim providing you only became aware of the right to complain within the last 3 years.

It is unlikely however that you’ll be able to claim for agreements which ended prior to 2007.

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

You can claim if the finance agreement is still active or if it is already paid off. We can check any agreement for you as long as you have paid something for it within the last 6 years.

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

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

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.

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?

The recent mis-selling scandal relates to ‘discretionary commission arrangements’. These commission arrangements were not used for leases or personal contract hire (PCH). Whilst unlikely, it is possible you still have a viable claim under different laws. Our specialist lawyers would be able to advise you further on this.

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

You can only claim for vehicles where the main use is 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 then you can no longer claim against them. There is however a possibility of still claiming from the dealer or broker that arranged the finance for you. Our specialist lawyers would be able to advise you further on this.

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

Yes, you can still make a claim. In fact almost all 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 find all of your agreements for you.

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 which will search your credit record for any motor finance agreements you’ve had live in the past 6 years.

Find Out How Much You Can Claim Now

Just add a few details to our claims checker for us to find your car finance agreements. We'll then tell you if you can claim and how much you might receive.

Check your car finance agreements now for free.

START INSTANT CLAIM CHECK

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

The FCA investigation into car finance found widespread mis-selling when they 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 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, in June 2020, the FCA banned commissions linked to car finance. The FCA estimate that 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 salesman adjust the interest rate on customer loans in order 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?

It is estimated by the Finance & Leasing Association (FLA) that 80% of all new cars are financed through personal contract purchases, otherwise known as PCP finance. PCPs are extremely popular as they can be considered a more cost-effective way of driving 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 an 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 relates 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 the car dealerships’ responsibility is to clarify this when discussing finance options with the customer 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 Out How Much You Can Claim Now

Just add a few details to our claims checker for us to find your car finance agreements. We'll then tell you if you can claim and how much you might receive.

Check your car finance agreements now for free.

START INSTANT CLAIM CHECK