Latest update for PCP claims
The FCA has confirmed a motor finance redress scheme. It may affect some PCP agreements where commission was not explained clearly.
However, the scheme now faces a legal challenge. This means the final timetable is uncertain, and payouts may be delayed.
PCP claims can also involve other issues, such as affordability checks, pressure selling, unclear charges, and poor explanations about the balloon payment.
What is a PCP claim?
A PCP claim is a complaint about a Personal Contract Purchase agreement that may have been mis-sold.
You may have grounds for a PCP claim if the dealer or lender did not explain commission, used a discretionary commission arrangement, increased the interest rate unfairly, failed affordability checks, or did not make key fees clear.
PCP agreements can look attractive because monthly payments are often lower. However, they are also more complex than many drivers realise. That is why PCP claims often centre on hidden commission, poor disclosure, mileage charges, balloon payments, and unclear explanations at the point of sale.
This guide explains what a PCP claim is, the warning signs to look for, and how to check whether your agreement may have been mis-sold. If you want the latest FCA scheme updates, read our pages on car finance compensation and the FCA redress scheme for car finance.
What counts as mis-sold PCP finance?
Mis-sold PCP finance happens when a dealer or lender sells an agreement unfairly or explains it poorly. For example, they may not explain the total cost, key charges, or the final balloon payment. In some cases, they may also give unclear or misleading information about monthly payments or end-of-term options. The FCA banned discretionary commission arrangements in 2021 after finding that some commission models gave brokers an incentive to increase the interest rate customers paid.
Other common examples of mis-sold PCP finance include:
Undisclosed commission: The dealer did not tell you they received commission from the lender, or did not explain how that commission could affect your deal.
Poor affordability checks: The lender or broker did not check properly whether the repayments were affordable for you.
Unclear fees and charges: Important costs, such as mileage charges, excess wear charges, or other end-of-agreement costs, were not explained clearly.
Poor explanation of the balloon payment: You were not given a clear explanation of the optional final payment or what would happen at the end of the PCP agreement.
Pressure selling: You were pushed into signing quickly without enough time to understand the agreement or compare other options.
Common signs your PCP agreement was mis-sold
PCP agreements can offer lower monthly payments and flexible end-of-term options. However, dealers do not always explain them clearly. That can leave drivers with costs or terms they did not expect.
You may have a valid PCP claim if key parts of the agreement were unclear from the start. For example, the dealer may not have explained the balloon payment, the total amount payable, or the cost of going over the mileage limit. They may also have rushed the sale or failed to explain important fees.
These warning signs do not prove mis-selling on their own. However, they can show that the agreement was not explained properly. That is often the first step in checking whether you have grounds to make a PCP claim.
Example of overcharged interest
Some PCP claims involve overcharged interest. For example, you may have been given a flat rate that looked fair at first. However, the dealer may not have explained that a lower rate was available.
If the broker could increase the rate, they may also have earned more commission. As a result, you may have paid more than necessary over the life of the agreement.
If you are making a PCP claim, the outcome will depend on your agreement and the evidence available. In some cases, drivers may be able to recover part of the extra interest they paid.
What can make PCP finance mis-sold?
PCP finance can become mis-sold when the customer does not get clear information before signing.
This may include unclear commission, poor affordability checks, pressure from a salesperson, or missing details about mileage limits and final payments.
Some drivers also say they were not told about cheaper finance options. Others say they did not understand the total amount they would pay.
These issues can make it harder to compare deals or decide whether PCP finance was right for them
How does a PCP claim work?
If you think your PCP agreement was mis-sold, you can start by checking the key details. These include your lender, agreement date, monthly payments, final balloon payment, and any information about commission.
Check: Complete our short survey and provide a few personal details. We can then search for your past and present lenders.
Review: We review the details you provide and look for signs of mis-selling. For example, this may include hidden commission, unclear charges, or weak affordability checks.
Claim: If we identify a valid claim, we will present the results and explain the next steps clearly.
Outcome: If your claim succeeds, you may receive compensation.
How do I know if I have a mis sold PCP claim?
You may have a valid PCP claim if key parts of the agreement were not explained clearly.
This can include hidden commission, inflated interest rates, weak affordability checks, or unclear end-of-term terms such as mileage charges or the final balloon payment.
If any of these issues affected your agreement, a good place to start is our short survey. It can help you find your agreements and check whether your PCP finance may fall within scope.
PCP claim FAQs
A PCP claim is a complaint about a Personal Contract Purchase agreement that may have been mis-sold or explained poorly.
Common signs include hidden commission, poor affordability checks, pressure selling, unclear charges, and poor explanations about the final balloon payment.
You may still be able to check your agreement. Bank statements, credit files, emails, or vehicle documents may help identify the lender.
No. Some PCP claims involve hidden commission. Others involve affordability, pressure selling, unclear mileage charges, or poor explanations of the final payment.
What should you do next?
If you think your PCP agreement was mis-sold, now is a good time to review the details.
PCP claims often turn on hidden commission, poor disclosure, weak affordability checks, or unclear end-of-term costs. If you want to check whether your agreement may have been affected, you can use our short survey to find your agreements. It only takes a few minutes to discover your lenders.
