In recent years, the UK’s car finance industry has come under serious scrutiny for the mis-selling of Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements. Investigations led by the Financial Conduct Authority (FCA) have highlighted questionable practices by some car dealerships and finance brokers—many of which may have left consumers out of pocket.

What Went Wrong?

Thousands of consumers may have been misled or sold deals that weren’t in their best interest. Common issues include:

• Undisclosed Commissions
  Many car dealers received commissions from lenders—often higher if they charged more interest. This created a conflict of interest that wasn’t disclosed to customers.
• Inadequate Affordability Checks
  Some finance agreements were approved without proper checks on whether the borrower could realistically afford the repayments.
• Misleading or Incomplete Information
  Customers weren’t always shown alternative finance options or fully informed of the total cost—especially large final “balloon payments” at the end of PCP deals.

Signs You May Have Been Mis-Sold

You could have a valid claim if any of the following apply:

• You weren’t told about commission payments to the dealer.
• The finance terms weren’t clearly explained.
• You didn’t understand there would be a large final payment.
• You were pressured to sign without being offered other options.
• Your credit report was affected without your knowledge.

What You Can Do

If you took out car finance between 2007 and 2021, it’s worth reviewing your agreement:

• Contact Your Lender or Dealer First
  Submit a formal complaint outlining what you believe was mis-sold. They have up to 8 weeks to respond.
• Escalate to the Financial Ombudsman
  If unresolved, you can take your case to the Financial Ombudsman Service (FOS):
  www.financial-ombudsman.org.uk
  The service is free and independent.
• Use Claims Firms with Caution
  If you choose to use a claims management company, ensure they are regulated by the FCA. Avoid firms that charge upfront fees or promise guaranteed results.

Stay Updated on FCA Action

The FCA is conducting a wider review into historic motor finance arrangements. This could lead to industry-wide compensation. Keep an eye on developments via www.fca.org.uk.

by Olivia Gunningham, Client Services Executive

Have Questions? We’re Here to Help.

If you think you may have been affected, or would like help reviewing your car finance history, please contact your adviser. We’re happy to support you through the process or connect you with trusted resources.