What is a PCP Claim?

PCP claims are a common way to seek compensation for mis-sold car finance. These claims are based on evidence, including repair invoices and communication with the dealer or finance provider. These claims can lead to refunds, contract amendments, or even contract cancellation.

Personal Contract Purchase (PCP) is one of the most popular forms of car finance in the UK. However, it can be mis-sold if dealers don’t properly explain the terms of the agreement.

Unfair or misleading terms

A PCP claim can be filed if you have been mis-sold car finance. This includes when the dealer or lender did not fully explain the terms of the contract, including interest rates and final payments. It can also include high-pressure sales tactics and failing to disclose commissions. You can file a PCP claim with your financial services provider or a solicitor.

A successful PCP claim can help you recover overpayments and restore your creditworthiness. This can ease the strain on your finances and improve your ability to save, invest, or pay off debts. You can even use the money to buy a new car or pay off other debts. But remember that a PCP claim is not a guarantee of compensation.

The FCA is investigating whether dealers and lenders have been using discretionary commissions to encourage consumers to take out a PCP agreement. The investigation follows widespread anecdotal reports of questionable incentive arrangements in the motor finance industry. If the FCA confirms that this mis-selling is widespread, a redress scheme will likely be introduced to compensate affected consumers.

If you think that you have mis-sold a PCP agreement, it’s important to review your contract and keep any documentation you may have. You can also contact your finance provider and ask them for clarification. If they cannot resolve your concerns, you can seek legal advice.

Inflated interest rates

PCP claims are a real thing, and they can result in compensation for those who have mis-sold their car finance contracts. This type of mis-selling can include a lack of explanation of the financial terms, hidden fees, and inflated interest rates due to undisclosed commission arrangements. The good news is that litigation funding has made it easier than ever for consumers to pursue their cases and secure compensation.

Inflated interest rates on PCP agreements are a major source of consumer frustration, and they can lead to significant overpayments. In many cases, these inflated rates were used to earn commission from brokers and dealers. These naughty practices prompted regulatory investigations and led to new rules that banned discretionary commission models in 2021. Millions of drivers could be entitled to a payout as a result of these changes.

As the FCA probes PCP contracts, consumers have been bringing claims based on a lack of transparency in the deals. In particular, many dealers did not clearly explain the terms of the agreement, and some of these terms included balloon payments, mileage limits, and extra charges for wear and tear. In addition, a failure to conduct an affordability check can also be grounds for a claim. Irresponsible lending claims can also be brought to hold dealers accountable for mis-selling, and they can yield larger compensation payouts than other types of claims.

Unreasonable fees

While PCP car finance agreements offer flexibility and convenience, they can also come with a number of disadvantages. These include inflated interest rates, balloon payments, and unfair mileage charges. These charges can significantly impact your finances, leading to financial hardship and stress. In addition, they may damage your credit rating, making it difficult to obtain future credit.

Fortunately, consumers can take action to resolve these issues. Filing a Pcp Claim can help bring these unfair practices to light, while holding dealers and lenders accountable for their actions. This can result in a refund, amendment to the contract, or even cancellation of the agreement. It can also improve a consumer’s ability to meet their financial obligations, thereby restoring creditworthiness.

As such, it is crucial to know the telltale signs of mis-selling when shopping for a new car. This way, you can avoid being mis-sold and get the best possible deal on your vehicle. In addition, filing a claim can help hold dealers and lenders accountable for their conduct, encouraging them to adopt fairer, more transparent business practices.

Discretionary commissions

Discretionary commission arrangements (DCAs) have been at the heart of the UK’s car finance mis-selling scandal. These were arrangements between lenders and brokers to incentivise them to increase the interest rate on a consumer’s finance agreement. It’s important to remember that DCAs were banned in 2021 so this ruling doesn’t impact anyone who has a car finance agreement on or before 28 January 2024.

However, the Court of Appeal’s ruling has opened up the possibility that people with historic car finance agreements could receive compensation for undisclosed fees and inflated interest rates. The claims are expected to run into billions of pounds and could force lenders to pay out settlements to consumers. It is also possible that some of these payments could be absorbed by the claims management companies who are handling these cases.

Legal assist to respond to the Court of Appeal ruling, the FCA has paused the time providers have to investigate complaints relating to DCAs until December 2025. This is to allow firms time to consider the implications of the judgment and how they should proceed. The FCA is also consulting on extending the timelines for complaint response and reassessing the scope of the review into historical motor finance DCAs to ensure it has sufficient resources to investigate potential misconduct and identify consumer compensation. The FCA wants to ensure an orderly and efficient system of compensation for those owed money.