If you have purchased a vehicle on a Personal Contract Purchase (PCP) or Hire Purchase (HP) agreement that started before the 28th January 2021 you may be entitled to compensation.

The vehicle finance industry is huge in the UK and each year billions of pounds are loaned to millions of people in order for them to purchase vehicles. Usually the dealer or broker placing the finance received a commission from the finance company for recommending their product. The Financial Conduct Authority (FCA) are currently investigating how commissions were paid by finance companies to vehicle dealers and finance brokers. A recent Financial Conduct Authority (FCA) investigation discovered widespread evidence of mis-selling on all types of UK car finance agreements and accordingly the FCA changed the rules regarding commission to protect consumers from the 28th January 2021.

There were three main ways in which finance was mis-sold.

1. Dealers manipulated the interest rates so that the customer paid a higher rate of interest that they may otherwise have done in order for the dealer to earn more commission. This was known as a discretionary commission agreement and it is estimated that up to half of all finance agreements had this discretionary commission element.

2. Finance was sold to customers who couldn’t afford it. Dealers didn’t do the proper affordability checks to ensure customers could afford the repayments and did not present them with all of the information necessary to decide if the agreement was financially viable.

3. Dealers did not disclose to their customers the amount of commission they received from the finance company for placing the finance.

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.

You may be able to claim for mis-sold vehicle finance if you bought a vehicle (usually a car) through PCP or HP finance after 2007 and before the 28th January 2021.

Your vehicle finance agreement may have been mis-sold by the salesperson or finance broker if:

- They did not inform you they would receive a commission from the lender for setting up the financial agreement.

- They did not inform you of all the finance options available, including explaining the differences and responsibilities of each type of product.

- They did not inform you, with complete transparency, of the interest rates charged for all finance options and how they may differ.

- They did not offer the best interest rate available to you.

- They did not adequately explain the details of the financial contract they sold to you, including the Terms and Conditions.

- They did not conduct adequate affordability checks or talked you into an unaffordable finance agreement.

- They used high-pressure sales tactics or did not give you adequate time to consider the agreement.

It’s the lender or dealership’s responsibility to prove that they did all of these adequately. If they can’t prove they did you’ll be entitled to claim for mis-sold vehicle finance.

You can claim for new or second- hand vehicles purchased on finance and for other vehicles purchased privately such as motorhomes, vans and motorcycles. You can claim for multiple vehicles at the same time.

There are a number of options available to you to make a mis-sold vehicle finance claim. You can approach the lender directly and request a refund or go to the Financial Ombudsman Service (FOS).

Alternatively, you can use our service where we will do everything for you. We work on a totally transparent no win – no fee basis so there is no financial risk to you in making a claim.

We try to make the process as simple as possible for you :

a. Add your details to our claim checker

b. We will confirm if we believe that you were mis-sold vehicle finance

c. We will request details of your agreement from the finance provider

d. We will check your agreement and negotiate the best settlement possible with the finance provider.

In terms of timescale there is currently an ongoing investigation by the FCA an they have indicated that this should be concluded by the end of September 2024. We don’t know what the outcome will be but are anticipating that they will order the finance companies to repay their customers. We are aware that a number of large finance companies are already making significant provisions in their accounts in anticipation of being ordered to make redress and we have already received offers of compensation from certain finance companies. We are anticipating that the claim process should take no more than 6 months but it is important that you lodge your claim as soon as possible as there will potentially be millions of claims that will inevitably result in longer processing times.

Our No Win, No Fee service means we will only charge a fee if your claim is successful (equal to 25% + VAT of your compensation) or if you cancel your claim after the 14-day cooling-off period expires but before your claim has concluded, in which case we may charge you a fee for any reasonable costs we have incurred at the rate of £175 per hour (including VAT).

It is estimated that 80% of all new cars that are purchased are financed through personal contract purchases, otherwise known as PCP finance.

PCP agreements are extremely popular as they can be considered a more cost-effective way of driving a new vehicle.

Personal Contract Purchase (PCP) are loan agreements which typically last between 2 and 5 years.

Usually you make an initial down payment and then you make monthly payment based on the car`s depreciation value.

At the end of the term there is usually a large balloon payment and you don’t own the car until this payment is made.

As you are not paying off the full value of the car over the term of the loan typically the monthly payments are lower than if you had a standard loan.

Many customers are unable to pay the balloon at the end of the term and so are faced with either handing the car back to the dealer or taking another PCP agreement which many will have done.

Hire Purchase (HP) is a type of loan agreement where you essentially hire the vehicle over the contract period.

You will generally pay an initial deposit, followed by monthly payments over a fixed term typically between 2 and 5 years.

The finance is secured against the vehicle so you only own it once the final payment is made. This usually involved an option to purchase or transfer fee.

It can be easier for people with a lower credit score to get this type of funding as compared to an unsecured personal loan.

If your claim is successful, the amount that you are awarded will depend on several factors.

a. The amount of the loan, generally the higher the more you will be able to claim back.

b. The interest rate you paid and the difference between the rate quoted and the rate that you should have paid.

c. The duration of the agreement, longer agreements will attract a higher award.

Example : if you purchased a car for £20,000 on PCP six years ago and the dealer charged you interest at 9.9% APR but the lowest rate available at the time was 4.9% APR then you would have paid approximately £2,200 more in interest over the term. We would claim a refund of this amount together with statutory interest at 8% so the total claim value would be approximately £3,000.

It is estimated that the average compensation for a mis-sold vehicle finance claim is likely to be atleast £1500

We`ve made our service accessible to everyone and so work on a no win – no fee basis. This means that there is no upfront cost to you and if you are unsuccessful there is nothing for you to pay.

When we are successful in obtaining compensation for you our fee becomes payable. Our fee is clearly explained in the terms of business and is highly competitive and less than the fees prescribed in the table produced by the FCA and endorsed by the SRA.

In order to simplify matters our fee is a set fee and is not based on the amount of compensation that you receive. We charge 25% plus vat of any compensation awarded and you keep the rest. As an example, if you were awarded £3,000 in compensation our fee would be £750 plus vat (£900 in total) you would receive a net amount of £2,100. We guarantee that there are no hidden deductions or additional fees payable.

We will also help you to find all of the finance agreements for which you may be eligible to claim compensation and will work with you to ensure that you receive the maximum compensation to which you are entitled.