Entering into a Personal Contract Purchase (PCP) agreement is often a flexible and convenient way to finance a new car. However, the intricacies of PCP contracts can lead to instances of mis-selling, leaving consumers with financial commitments that were not transparently communicated. It’s essential to understand your rights and the steps you can take if you believe your PCP (or HP) agreement was mis-sold. (Note: following the Supreme Court ruling on 1 August 2025, most complaints are now assessed under Section 140A of the Consumer Credit Act 1974 (“unfair relationship”). The FCA has paused firms’ final responses on commission-related complaints until 4 December 2025 while it consults on a redress scheme which is expected to be announced in early 2026.)
What Constitutes Mis-selling?
Mis-selling of PCP agreements can manifest in several ways:
- Lack of transparency: Not providing clear information about the total cost, including APR, the final balloon payment (GFV), fees/charges, or disclosing whether commission could have influenced your interest rate (especially pre-28 January 2021 when discretionary commission arrangements (DCAs) were permitted).
- Unsuitable recommendations: Steering you toward low monthly payments with a large balloon without assessing whether that end-payment was was affordable or appropriate for your financial circumstances.
- Insufficient information on conditions: Failing to explain mileage limits, vehicle condition standards on return, or charges for exceeding limits.
- High-pressure sales tactics: Rushing you to sign without adequate time to read the SECCI (Standard European Consumer Credit Information) or compare options. This could also include not clearly presenting alternative finance products.
- Inadequate affordability checks: Not evidencing income/outgoings (e.g., no payslips/bank statements), in potential breach of the FCA’s CONC 5 requirements to assess creditworthiness and affordability.
Your Consumer Rights
The key protections for PCP/HP customers come from:
- Consumer Credit Act 1974: Early settlement rights (sections 94–95), voluntary termination (s.99), and s.140A (unfair-relationship test) which allows the court to grant redress where a credit agreement’s terms or the way it was sold created an unfair relationship between the lender and the customer.
- FCA Consumer Credit Sourcebook (CONC): Rules on affordability (CONC 5), financial promotions, adequate explanations, and commission disclosure expectations (CONC 4.5), plus fair arrears treatment (CONC 7).
- Financial Ombudsman Service (FOS): Free, independent and binding dispute resolution once a final response is issued. (Current FCA pause on final-responses for commission complaints runs to 4 December 2025; FOS award limits—editorial standard—up to £415,000 for acts/omissions on or after 1 April 2019, £190,000 for earlier.)
Legal Actions You Can Take
- Complain to your finance provider for free: Write with specifics (what wasn’t explained, why the product was unsuitable, any commission concerns). Ordinarily firms have eight weeks to reply; commission-related complaints are currently paused until 4 December 2025 while the FCA finalises its approach. You can still submit your complaint now so it’s logged.
- Escalate to the Financial Ombudsman Service: If you’re unhappy with the outcome once a final response is issued, refer to FOS within the time limit on the letter.
- Court claim under the CCA: For s.140A claims, the six-year period generally runs from when the credit relationship ends (not the start date). Seek legal advice where appropriate.
- Use a regulated Claims Management Company (CMC): If you’d like help, a regulated CMC such as PCP ClaimBack can assess your case, handle the paperwork, and advise on escalation. You can always complain directly to your lender for free if you prefer. PCP Claimback works on a No Win, No Fee basis. If your claim is not successful, you don’t pay them a penny. A success fee between 18% and 36% (including VAT) will be charged if your claim is successful. If you cancel your claim after the 14-day cooling-off period, you may still be charged a fee to cover our reasonable costs incurred in relation to Our Services at the rate of £75 per hour (including VAT).
Precautionary Measures
- Read the T&Cs and SECCI carefully: Check APR, total amount payable, balloon, mileage, fees, and any mention of broker/dealer commission.
- Request full disclosure: If unsure, submit a data subject access request (DSAR) to your lender for your credit application, underwriting/affordability notes, and any commission records.
- Sense-check affordability: Consider whether the balloon and monthly payments were genuinely affordable at the time of sale.
- Seek independent advice: If anything is unclear, speak to an independent adviser. You can also review our resources on pcp claims, bmw pcp claims, and broader car finance claims for guidance.
Understanding and identifying mis-selling in your PCP or HP agreement empowers you to act. If something doesn’t look right—unclear commission, missing affordability evidence, or key terms not explained—you have options to challenge the agreement and seek redress. PCP ClaimBack can assess, handle the paperwork, and advise on the best route forward, or you can complain directly to your lender at no cost.
