The Truth About PCP Refunds: What Lenders Don’t Want You to Know

Personal Contract Purchase (PCP) agreements have become a popular way to finance cars. Many borrowers are now discovering they were mis-sold these agreements. If you had a PCP deal, you might be entitled to a refund.

What Is PCP and How Does It Work?

PCP is a type of car finance where you pay monthly instalments. At the end of the term, you can return, trade-in, or buy the car outright. Lenders structure these deals to keep monthly payments low while locking you into finance agreements.

The Mis-Selling Scandal Explained

Many car buyers were not properly informed about the financial risks. Lenders and dealerships often failed to disclose commission structures and inflated interest rates. This led to borrowers paying far more than necessary for their vehicle.

Signs You Were Mis-Sold PCP Finance

If you were not told about the commission on your deal, you might have a case. Unclear interest rates or pressure to sign quickly also indicate mis-selling. Any misleading information about your final payment could strengthen your PCP claim.

FCA’s Investigation Into Car Finance Mis-Selling

The Financial Conduct Authority (FCA) has been investigating unfair practices. In 2021, they found that discretionary commissions led to unfair pricing. As a result, thousands of motorists could be due compensation.

How Much Could You Claim Back?

Compensation amounts vary based on the level of mis-selling. Some refunds have reached thousands of pounds due to hidden commissions. Lenders may also owe interest on the overpaid amount. If your PCP claim is valid, you could receive a significant refund.

How to Check If You Are Eligible for a PCP Refund

Start by reviewing your finance agreement and looking for hidden fees. If key details were not explained at the time, you could have a valid claim. Getting legal advice or using a claims specialist can help assess your case.

Steps to Claim a PCP Refund

Request a copy of your finance agreement from the lender.
Identify any undisclosed commissions or inflated interest rates.
Contact the lender to raise a complaint about mis-selling.
If your PCP claim is rejected, escalate it to the Financial Ombudsman.

What If Your Lender Rejects Your Claim?

You can escalate the issue to the Financial Ombudsman Service. They review cases independently and can order refunds if mis-selling is proven. Some cases may take months to resolve, so patience is required.

Beware of Claims Management Companies

Many firms offer to handle claims for a fee, but you can do it yourself for free. The Financial Ombudsman does not charge for investigating complaints. Avoid companies that take large commissions from your refund.