Personal Contract Purchase (PCP) is a popular way to finance a car in the UK. Many customers were mis-sold agreements due to unfair commission structures and misleading affordability checks. If you had a PCP deal, you might be entitled to a refund due to hidden fees or overcharging.
How to Check If You Were Overcharged
Lenders often added discretionary commission models to PCP deals without telling customers. The Financial Conduct Authority (FCA) investigated and found that dealers inflated interest rates for higher commissions. Check your finance agreement, total interest paid, and compare it with fair market rates to spot discrepancies.
Who Is Eligible for a PCP Overpayment Claim?
You may be eligible if you had a PCP or Hire Purchase (HP) finance agreement from 2014 onwards. The FCA ruled that unfair commissions and lack of transparency led to overpayments. If a dealer failed to disclose commissions or inflated interest rates, you could have a strong case.
Step 1: Gather Your PCP Agreement Details
Start by finding your original car finance agreement and payment statements. Look for the total amount borrowed, interest rate, and monthly repayments. If you suspect overcharging, request a Subject Access Request (SAR) from your lender for more details.
Step 2: Check for Mis-Selling Signs
Mis-selling includes lenders failing to disclose commissions, inflating interest rates, or pushing unaffordable deals. The FCA found some car dealers used hidden fees to boost their earnings. If you were not told about commission structures, you might have been mis-sold your PCP deal.
Step 3: Submit a Formal Complaint to Your Lender
Write a complaint letter to your finance provider explaining why you believe you were overcharged. Include details about undisclosed commissions, higher-than-expected interest rates, and any financial harm caused. Lenders have eight weeks to respond with a resolution or reject your claim.
Step 4: Escalate Your Claim to the Financial Ombudsman
If your lender rejects your complaint, escalate it to the Financial Ombudsman Service (FOS). The FOS investigates disputes between consumers and financial firms for free. Many successful claims result in partial or full refunds, depending on the level of overcharging.
How Much Money Could You Reclaim?
The amount depends on your PCP contract, interest rate, and commission structure. Some drivers have reclaimed over £1,000, while others received thousands in refunds. If the FCA forces lenders to compensate all affected customers, billions could be returned to UK motorists.
What to Do If Your Lender No Longer Exists
If your car finance provider has closed, check if another company took over its accounts. The FOS and the Financial Services Compensation Scheme (FSCS) may help with claims against defunct firms. You can still submit a claim, but processing times might be longer.
Should You Use a Claims Management Company?
Some firms offer to handle PCP claims, but they take a percentage of your refund. Submitting a complaint yourself is free and straightforward, following FCA and FOS guidelines. If you feel overwhelmed, a claims management company could help, but ensure they are FCA-authorised.
How Long Do You Have to Claim?
The deadline depends on when you discovered the overcharge. Typically, you have six years from the finance agreement date or three years from when you realised the issue. If the FCA enforces refunds industry-wide, deadlines may change, so act quickly.
Final Thoughts
If you suspect you overpaid on a PCP deal, check your finance agreement today. Submitting a complaint costs nothing and could put money back in your pocket. Whether you’re making a general claim or pursuing a MotoNovo Finance claim, now is the best time to start your claim.
