Free Guide – PCP Claims

About this guide

If you bought a car, van or motorbike on Personal Contract Purchase (PCP) before January 28 2021, you could be due back £1,000s.

In January 2021, the regulator, the Financial Conduct Authority (FCA), announced a blanket ban on ‘discretionary commission arrangements’ (DCAs). Up until that point, lenders allowed brokers and dealers to increase the interest rates so they could get more commission. This unfair practice affected about 90% of car finance deals. It was so exploitative because most consumers wrongly presumed it was a fixed price – they never thought to negotiate and ended up significantly overpaying.

In January 2024 the FCA launched a major investigation into hidden, unfair car finance commission. This could lead to millions of pounds interest being paid back to millions of overcharged consumers.

We’ve partnered with PCP checker to make the process of claiming back the costs of dodgy car finance agreements easier and faster. However, we have also created this free guide to show you how to make a claim yourself. Whichever way you decide to claim, it’s important to do so as quickly as possible – and avoid being excluded by the time limits for claiming.

What is the best way to claim?

While it completes its investigation, the FCA has extended the window for motor finance firms to process consumer complaints about discretionary commission arrangements. This means that while it encourages firms to accept and progress complaints, they don’t have to make any decisions until the FCA reports the findings of its investigation.

The current schedule they have in place will close the investigation on 25 September 2024, but there is a possibility that it will be extended. However, it’s important to submit your complaint or claim as soon as possible to ensure that it’s ‘registered’ within the time limitation period.

The FCA guide on car finance complaints and discretionary commission arrangements can be found here.

This guide takes you through a simple complaint process. If you would rather make use of legal support, and go via the courts, our partner can support your claim and do most of the legwork for you.

What is the best way to claim?

Ultimately it’s your decision which process you follow. We are obliged to state clearly that the guidance we give here does not constitute legal advice.

If you have any questions please reach out to us at support@resolver.co.uk.

Check if you’re eligible

Step 1: Find out whether you were affected

If you’ve ever had a car finance deal – taken out before 28 January 2021 – it’s likely that you were affected by these unfair commission charges.

The FCA’s estimation is that around 95% of deals had a commission model, and 90% had the ‘discretionary commission arrangement’. If yours did, and it wasn’t made clear to you at the time, you may be entitled to money back once the FCA wraps up its investigation and un-pauses complaints.

You may have been affected if you bought a motor vehicle – including cars, vans, camper vans and motorbikes – on finance and…

• you still have an agreement in place.
• your agreement ended at some point in the last six years.
• you had a much older agreement but are complaining within three years of learning of the issue*

Other factors to consider

* A note on older agreements:

In the case that you had a much older agreement but are complaining within three years of learning of the issue, you must proceed with your claim as quickly as possible. The reason for this is that the sooner you log your complaint, the less likely it is you that you’ll be excluded by the deadline.

To be clear, there is a strong possibility that you won’t be able to complain about agreements made before 6 April 2007. That’s because this is when the Financial Ombudsman took over jurisdiction of motor finance complaints. However, the precise rules on who can claim will only be fully disclosed when the FCA wraps up its investigation – September 2024. But we reckon it is probably worth submitting a claim anyway.

Can I reclaim for a vehicle I used for work?

The rules stipulate that a vehicle had to be for primarily personal, not business, use. While commuting comes within personal use, using it more than occasionally for business, or paying the expenses through your business, will mean that you don’t qualify for compensation. (Some vehicles that were financed through a business agreement could be included – but only if they’ve been used for primarily non-business reasons and financed through a regulated credit agreement for under £25,000. This cap only applies to business agreements – not personal finance agreements).

Can I reclaim on behalf of a deceased relative?

You can make a claim on behalf of someone who has passed away. However, the lender will probably need you to provide a copy of the will and/or grant of probate in order to ensure that any compensation gets paid out to the right person.
Other factors to consider

Does this include vehicles that have been paid off?

Yes – even if the loan been paid off, and the agreement is over, you are still eligible to reclaim.

Does it include Personal Contract Hire?

No. This is leasing a car and is not included in the FCA investigation – if you had this type of finance agreement, this guide isn’t for you.

What if I had interest-free finance?

No. If you had a 0% interest deal there could not have been any ‘discretionary commission arrangement’ between the lender and the broker, as these DCAs were all about increasing the interest.

Is it possible to have multiple claims?

Yes. If you had multiple eligible car finance deals, you may be due multiple payouts. Each case is individual. If you want to make a claim yourself – rather than using our partner – you will need to make a separate claim for each firm/finance provider you had an agreement with.

Which firms are involved?

There are hundreds of car finance firms and more general financial providers involved in this scandal – including:

• BMW Financial Services
• Santander Consumer Finance
• Mercedes Benz Financial Services
• Black Horse
• Alphera
• Barclays Partner Finance

Step 2: Find out who to complain to

To claim yourself, you must make a complaint to the lender that provided the finance. In other words, the firm you paid each month – not the broker/car dealer who sold you the vehicle.

To find out who you should submit your complaint to you must check any loan agreement documentation you have and collect as much information as possible about your car finance agreements. You can then use the template provided on the next page.

What if I don’t know the details of my agreement?

If you can’t find the paperwork relating to your original agreement, you should check your credit report. If your agreement has been active in the past six years, it should be listed on there. You could also check any old bank statements if you have them. Once you’ve found the firm’s name, even if you don’t know the finance agreement details, you should give them a call and request that they provide you with the full information.

Step 3: Submit a complaint

We have partnered with Finance Refund Experts to make it faster and more straight-forward for people to submit a claim. This will be on a ‘no win no fee’ basis.

However, you can also copy and complete the template on the following page to make a complaint yourself.
Remember, for multiple claims you’ll have to submit one for each lender.

Letter template

Dear [name of finance provider],

I’m getting in touch to make a complaint about a previous agreement I had with you.

While the FCA has not yet completed its investigation into PCP car finance, I would like you to log my complaint – as I believe I was unfairly charged and may be due compensation.

Please find my details and information relating to the policy below:

• My full name:
• DOB:
• Current address:
• Address at the time of agreement:
• Vehicle registration:
• Date of agreement:
• Finance agreement policy number (These should be on all agreement letters or paperwork you have):

As well as logging this as a formal complaint, I request that you reply with written confirmation of receipt.
Kind regards,
[Your name]

Step 4: Wait for a response

You should receive an acknowledgement of receipt within one month. If you haven’t make sure you:

• Check your sent box – make sure that you definitely sent the message.
• Check your junk mail – make sure the reply wasn’t marked as spam.
• Check the address you sent it to – compare with the firm’s website to ensure it is the correct contact.

If you have done these and still have no response from the firm you should chase them up.

We recommend that you give the car finance provider a month to respond. However, we also expect that many firms will take longer due to the sheer number of people making enquiries. It may also take the firm a little longer to respond if your enquiry does not have all of the details of your agreement – as they will need to run their own checks on whether you actually had a DCA.

The most important thing is to get your complaint in and make sure that it’s been acknowledged so as to minimise the risk of being timed out.

Nothing is due to happen until September when the FCA releases its report – so once you have confirmation of receipt you can just wait.

Had a response, what next?

If you are told: ‘Please provide further information” this is a good sign – as it will be to help them track down your records with them. Especially if you are emailing from a different address than the one you used when you took out the agreement, providers will need to ask for additional information to ensure that they’re dealing with the right person and not giving out financial details to someone else.

If you are told: ‘Yes, you had a discretionary commission arrangement (DCA) and we’ve logged your complaint’ you’re potentially in-line for a payout if the FCA rules for redress in September. As your complaint has now been logged, you’ve done all that’s needed for now. Unless the firm requests any further information, you just need to wait until the FCA finishes its investigation in September 2024.

If you are told: ‘No. You didn’t have a DCA on your contract’ then you weren’t overcharged – and do not need to pursue the claim further.

Had a response, what next?

If you are told: ‘You had a DCA but…’ then the firm may be trying to get rid of you. They may say ‘we’ve rejected your complaint’ and redirect you to the ombudsman instead. This tactic was used by banks during PPI and is simply designed to put people off pursuing the complaint. It does not mean that you don’t have a claim. The main thing is that the provider has confirmed that you had a DCA and has logged your complaint. So all you need to do is wait until the FCA reports in September. (If they say that this is their ‘final response’ you can also go to the Financial Ombudsman – they may not be able to issue a final decision for some time, but feel free to fill in their online form so you can rely on their support in future).

If you are told: ‘We can’t find your info’, this may be tricky. The FCA rules state that firms must make ‘serious endeavours’ to find your details. However, their ability to do so depends on how long ago you took out the finance. If your car finance was active within the last six years, the firm should have retained your details. If it was longer, it may not be possible to track them down – but the firm must try anyway. This is why the more details you can provide, the better chance you have of a successful claim.

How much compensation can I expect to receive?

The FCA hasn’t yet stated how it will pursue redress – and won’t until they have closed their investigation (currently set for September 2024). They could decide that all the interest should be repaid, or only a fixed percentage above a fair amount.

However, in previous cases that the Financial Ombudsman has taken up and pursued, motorists who were mis-sold car finance were repaid the difference between the interest rate charged and the lowest available rate at the time. This could be a good guide for estimating how compensation will be calculated in other cases.

According to the FCA’s stats car buyers paid on average £1,100 more interest on a typical £10,000 four-year car finance deal when there was a discretionary commission arrangement. The bigger the financing agreement, the more you were charged, so the more interest you may be due back.