YOU MAY HAVE A CLAIM FOR COMPENSATION

Claim PCP finance compensation

A recent ruling by the FCA means that if you have ever had a PCP or HP Agreement for car finance that was mis-sold, you may be entitled to claim compensation.

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What are PCP finance claims?

PCP or Personal Contract Purchase, is the most popular car financing option today (March 2022) with 9 out of 10 new cars financed this way. It allows someone to buy a new car without paying the full cost upfront, and instead pay monthly instalments. At the end of the finance term, if you want to own the car, you pay a final payment (known as a ‘balloon’ payment) and then the car is yours.

How was PCP finance mis-sold?

Lenders incentivised finance brokers and car dealers to charge customers higher interest rates so they could receive higher commissions themselves. This created a ‘conflict of interest’ because the person selling the car acted as both the car dealer and the finance broker and was free to set the interest rate. Because the broker had total discretion over the interest rates, there was a direct link between the amount of interest charged to the customer and the amount of commission received by the broker. The FCA found that many sellers did not acknowledge that they were receiving commission or the commission was linked to the level of interest charged.

In this section

› PCP Finance

› The FCA Investigation

› How to check you were mis-sold

› 3 common mis-selling examples

› The evidence you need

› Appealing to the FCA

› Common questions

The FCA investigation

The Financial Conduct Authority (FCA), which regulates the financial services industry, concluded in 2019 that victims of PCP may have paid up to £1,000 more as a result of car brokers misleading them on interest rates.

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How to check you were mis-sold PCP finance

The FCA found that ‘mis-selling’ of PCP was mostly down to irresponsible selling tactics by the seller, these included:

Fees

The seller did not explain the finance fees, interest rate and terms in detail.

Product Selection

The seller did not explain the different finance products available to you and explain the differences between each product.

Competitive Rates

The seller did not offer you the most competitive interest rate available at that time.

Unaffordable lending

The seller offered you a finance product that was unaffordable based on your personal circumstances.

Responsibility

The seller did not make it clear who was financially responsible for vehicle repairs during the term of the agreement.

Responsibility

The seller did not make it clear who was financially responsible for vehicle repairs during the term of the agreement.

Add-On Insurance

The seller sold you “add-on” insurance that was expensive and unnecessary.

Mileage Limit

The seller did not explain that the agreement came with a ‘mileage limit’, that if broken, incurred steep charges.

Acceptable Condition

The seller did not explain that if the car was returned in an ‘unacceptable condition’ at the end of the term, that you would be charged.

Total Cost

The seller did not explain the total amount payable for the car including the final ‘balloon payment’

If any of these sound familiar, it’s likely you could have a claim:

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3 common PCP finance mis-selling examples

If you can relate to any of the below you may have claim:

Hidden Commission

The mystery shopper investigation by the FCA in 2018 found only 11 dealerships out of 122 correctly disclosed the commissions they earned.

High Interest

Car dealership sales teams set the interest rates – the higher the rate, the higher the commission they received. The FCA banned this practice in Jan 2020 as it was a clear conflict of interest.

Transparency

The FCA found 70% of dealerships did not fully explain the terms and conditions, leaving customers unclear on the costs. The FCA concluded that this did not comply with their ‘regulatory requirements’.

If you can relate to any of these points you may have claim and should complete our 5 minute form now:

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Key Fact

Hire Purchase (Motor) is the fifth most complained about product with 1,813* enquiries.

FOS Quarterly Complaints Data (Q2 2021/22)

The evidence you need

You don’t actually need concrete evidence that you were mis-sold a PCP agreement. Often it’s not the actual PCP deal that is at fault, it’s how the deal was sold to you.

your comments about key events and dates
correspondence between you and the finance provider
any pre-sale literature such as car manual, advert, service history and invoice
your pre-contract document and any other information on the finance agreement

Don’t worry if you can’t find all this information, all we need is some personal details, proof of address and your finance agreement to get started.

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Did you know?

On average, the uphold rate for car finance claims (HP) is 44%.

FOS Quarterly Complaints Data (Q2 2021/22)

If the lender rejects your claim

If your complaint is rejected by the finance provider we will consider referring it to the Financial Ombudsman Service (FOS) to see if they feel your finance was misrepresented, mis-sold or misdescribed.

The laws used

If your complaint is rejected by the finance provider it may be referred to the Financial Ombudsman Service (FOS) for review. They will review your case with consideration to the following laws:

the Consumer Credit Act 1974 (section 56)
the law on misrepresentation
the Consumer Rights Act 2015
the Consumer Protection from Unfair Trading Regulations 2008
credit broking obligations set out in the FCA Consumer Credit Sourcebook (CONC)

The criteria used

The FOS will look at both the financial provider and the credit broker. In some circumstances they can even hold the financial provider liable for what is said by the broker. Specifically the FOS will investigate the how the consumer was misled as well as:

what both the consumer and the car dealer say actually happened
how significant was the resulting issue caused by what happened
paperwork or documents that were issued to the consumer before they entered into the finance agreement
the communication, including emails and texts between both parties prior to the agreement being entered into

If the FOS upholds your claim they will consider the impact on you and have the power to order the finance company to award compensation, write off some or all of the charges or end the agreement and take the car back. They will also consider if it’s reasonable for you to be reimbursed any costs you have incurred as a result of the agreement, for example storage costs.

Common questions

How much compensation could I receive?

The average PCP claim is around £3,000.

How far back can I claim?

We can help with mis-sold finance agreements in the last 10 years.

Can you do a no win, no fee PCP claim

Yes. Our panel of solicitors who process your claim offer a no-win, no-fee claim service. That means if they are not successful in claiming you a refund, you don’t have to pay anything.

How much do you charge?

There’s no fee to pay upfront and if you don’t receive a payout, our panel of solicitors, who process your claim, don’t charge you anything. They work on a no win, no fee basis and charge a fee on any successful claims. The total charge is based on the total refund received from your lender. The amount you pay will either be a sum equivalent to the ‘Maximum % Rate of Charge’ or a sum equivalent to the ‘Maximum Total Fee’, whichever is the lesser. This will be confirmed when you receive a Conditional Fee Agreement (CFA) from the law firm before you proceed with your claim.

How long does it take?

The typical claim takes between 8-12 months from the date we receive your application, until the date the payment is made.

What does PCP stand for?

PCP stands for Personal Contract Purchase and similarly, like Hire Purchase (HP) or a mortgage, it is a loan that is paid off monthly.

I don’t know if my finance was PCP?

Many big car companies rebrand their PCP products to make them more appealing, here are a few examples. Audi Solutions, BMW Select, Ford Options, Honda Aspirations, Jaguar Privilege, Kia Access, Land Rover Freedom, Mercedes-Benz Agility, Mini Select, Renault Selections, SEAT Solutions, Škoda Solutions, Vauxhall Flexible PCP, Volkswagen Solutions, Volvo Advantage

I’m in an IVA, can I claim?

Unfortunately if you are currently in an IVA it is likely that a solicitor will not accept your case. This is because any compensation you receive will be offset against the debt and the solicitor won’t get paid.

Is Hire Purchase and PCP the same thing?

PCP is a form of HP. With PCP you pay off a smaller proportion of the loan and pay a ‘balloon payment’ at the end of the deal in order to own the car. With HP you just pay larger monthly instalments with no balloon payment. We accept claims for both.

Why is PCP so popular?

Because of the lower monthly payments they allow you to get a more expensive car than you could using HP or a personal loan.

Who owns the car with PCP?

The loan finance in a PCP agreement is secured against the car, just like a mortgage. The finance company therefore has a financial interest on the car until the loan has been paid.

How long are PCP agreements?

Typically they last 36 months but can range from 18 to 48 months. Longer loans have smaller monthly payments but you end up paying more overall due to the intertest.

Can I terminate a PCP agreement?

Yes. Section 99 of the Consumer Credit Act says that in some circumstances you can voluntarily terminate a regulated HP or PCP agreement.

What happens at the end of my PCP agreement?

At the end of the agreement you can either give the car back, pay the balloon payment and own the car outright or part-exchange the car.

What is a deposit contribution?

Basically this is a discount in exchange for taking out the loan. Instead of taking £1,000 off the car, they are giving you £1,000 towards paying for the finance of the car.

Can my car be repossessed if I miss a payment?

If you have missed more than one third of payments due the finance company can repossess the vehicle. If you have paid more than one third, they need to get permission from the courts.

Don’t Delay. Check Now.

Don’t miss out on £100’s or even £1,000’s in compensation you could be entitled to. Checking only takes 5 minutes, so why not do it now?

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