Thousands have been mis-led on car deals. We’re determined to make things clearer. Below are a number of answers to our most-asked questions. If you want to know anything else, feel free to get in touch.
Most claims are sent to banks or lenders associated with car manufacturers, rather than the car makers themselves. That said, you can cut out the middle man — Our partners successfully settled cases involving leading companies like BMW, Audi, Mini, Volkswagen, Kia, and Toyota.
You can typically make a PCP claim for any agreements entered within the last 6 years. However, if you've only recently become aware of the potential mis-selling, the clock could start then.
The status of a loan — whether it's been fully paid off or is still being paid — can not stop you from claiming if you believe you were mis-sold. Claims are based on the manner in which the agreement was sold, the transparency of the terms and whether all relevant information was provided at the time of sale, not how much you’ve repaid.
Yes. Both new and used vehicles can be mis-sold — it all comes down to how the finance agreement was handled, not the age or condition of the car.
No. If you bought a car using a personal loan instead of a car finance loan like PCP or HP, you can’t have been mis-sold. This is because personal loans are not secured against the vehicle and fall under different financial regulations. Mis-selling claims typically relate to the specific terms and conditions of car finance agreements, including how interest rates and commissions are presented and applied.
An investigation held by the Financial Conduct Authority (FCA) has provided concrete data and regulatory insights that substantiate PCP mis-selling in UK car dealerships. Evidence includes:
Of 122 car retailers surveyed, only 11 informed their customers that the dealership may receive a commission for arranging the finance deal — pointing to a widespread lack of transparency in the industry.
Only 31% of brokers explained that their customers would not own the car until all payments, including any balloon payments, are completed. This omission leaves many consumers unaware of the fundamental terms of their agreements.
Only 28% of brokers disclosed the total amount their customer would ultimately pay under the finance agreement, as well as detailing the consequences of missed payments or early withdrawal from the agreement. Pretty critical stuff if you’re looking to make an informed financial decision.
And perhaps the most telling stat… On a typical motor finance agreement of £10,000, it was found that customers could be charged up to £1,600 more in interest through a PCP arrangement compared to other financing plans.
Jonathan Davidson, the FCA’s Director of Supervision for Retail and Authorisations, described these findings as unacceptable, highlighting that "some motor dealers are overcharging unsuspecting customers over £1,000 in interest charges to obtain bigger commission payouts for themselves.”
The FCA's response to these findings was decisive. In June 2020, it implemented a ban on commissions linked to car finance, a move projected to save consumers around £165 million a year. This regulatory change marks a significant step towards rectifying mis-selling practices in the car finance sector, aiming to foster a fairer, more transparent market for consumers.
After submitting a claim:
You'll receive an acknowledgment of your complaint from the finance provider.
The provider will then investigate your claim, which may involve requesting further information from you.
Within two months (or longer if your claim involves a discretionary commission arrangement), the provider typically offers a response. They will either acknowledge mis-selling and offer compensation, or reject the claim.
If your claim is rejected or you're dissatisfied with the response, you can escalate your complaint to the Financial Ombudsman Service.
A Discretionary Commission Arrangement is when the amount of commission a car dealer or broker receives directly links to the interest rate of the car finance agreement they sell. In other words, the higher the interest rate they convince the customer to agree to, the higher their commission. This practice was banned by the FCA on 28 January 2021 to prevent financial incentives from influencing the cost of loans for consumers.
The amount you can reclaim depends on a number of factors, including the size of your loan, the terms of your agreement and how much you were overcharged — be it through undisclosed commissions or inflated interest rates. On average, compensation comes to £1,600. In some cases, that has risen to over £3,000.
Anyone who entered a car finance agreement (such as PCP or HP) that was not sold transparently, where terms, commissions, and costs were not fully disclosed, or where the product was unsuitable for their needs, may be eligible. This includes agreements signed before certain regulatory changes were implemented by the FCA in January 2021.