The FCA began its investigation in April 2017 in response to a rise in household debt and a surge in complaints about vehicle finance payments, mainly PCP finance.
The FCA uncovered widespread overcharging in PCP and HP contracts, amounting to an estimated £300 million a year in excess interest payments for some UK dealerships.
How Did This Happen? The FCA investigation revealed several ways in which car dealers mis-sold PCPs. Drivers were often charged excessively high interest rates and misled about the vehicle's value at the end of the contract. Additionally, they were not informed about penalty fees for switching cars before the contract ended and were often unaware that PCPs could carry higher interest rates than standard hire purchase agreements.
In some instances, dealers failed to verify whether customers could afford the loan repayments, contributing to rising debt levels. Customers were also not informed about commissions charged by sales representatives. Although not legally required, this is considered “best practice” in the industry. The FCA found that commissions were frequently tied to the interest rate charged, incentivizing salespeople to increase the cost of finance deals to earn more commission.
How Has This Affected You? Vehicle finance deals are inherently complex, and while not all dealers intentionally mis-sold products, the complexity of these contracts often led to customers being mislead. You might have grounds for a claim if:
To reclaim your money, you need to take action. The FCA’s investigation has empowered many consumers to file car finance claims. The process is quick and straightforward. Start by using our eligibility checker to see if you maybe eligible to claim compensation. It takes just two minutes to complete the form. After that, simply wait and our team will get in touch.
Don’t let dealers and finance companies take advantage of you. Check now to see if you can start a PCP claim.