If you took out a car finance agreement in the UK before 2021, you may be owed compensation due to mis-sold finance deals. Many drivers were unaware of hidden commission fees and unfair practices. You could claim thousands back. Start your claim today with expert help from National Claims.
What Is Car Finance Mis-Selling?
Car finance mis-selling happens when a dealer or broker fails to fully explain the costs, interest rates, or commission structure tied to your vehicle finance agreement. This often includes Personal Contract Purchase (PCP) and Hire Purchase (HP) plans.
A key issue was that many customers were not told about discretionary commission arrangements (DCAs)—where dealerships earned more commission by increasing your interest rate. This practice was banned in January 2021 by the Financial Conduct Authority (FCA), but many drivers are still affected by older contracts.
Why This Update Matters
In January 2024, the FCA launched an investigation into car finance mis-selling, following a significant rise in complaints. They are currently reviewing the entire car finance market, which could lead to widespread compensation for consumers.
If you had a PCP or HP agreement before 2021 and weren’t informed about commission charges, you may be eligible to claim compensation—even if your agreement has ended.
According to the FCA, complaints rose after a landmark ruling that deemed secret commissions unfair and in breach of consumer rights. You could be due a refund of interest, fees, or even the full commission.
How Car Buyers Were Misled
A typical mis-sold car finance scenario looked like this:
- You walk into a dealership for a used car.
- The dealer offers you a PCP plan with no mention of commission.
- You agree to a higher interest rate, assuming it’s the best available.
- What they didn’t tell you is they earned a higher commission by setting a higher rate.
This practice added hundreds or even thousands of pounds in unnecessary costs for the consumer—money you may now be entitled to claim back.
In fact, the Financial Ombudsman Service (FOS) has upheld numerous complaints, ruling in favour of consumers in these situations.
What Is the FCA Doing About It?
The FCA banned discretionary commissions from 28 January 2021 and is now reviewing past complaints and deals involving these commission structures.
In a statement in January 2024, the FCA said they’re considering “wider redress schemes” if they find systematic failings across the market. A final decision is expected later in 2024.
If the FCA decides compensation is due, it could affect millions of car owners across the UK.
How Much Compensation Can You Claim?
The amount you can claim depends on several factors:
- Commission amount: You could reclaim the undisclosed commission.
- Overpaid interest: If you were charged a higher rate due to DCA, you might get the difference refunded.
- Total repayment: In some cases, full interest and fees could be refunded.
- Damages: You may also claim for financial distress or poor credit rating due to unaffordable terms.
Estimated Compensation Examples:
| Agreement Value | Estimated Claim Amount |
|---|---|
| £10,000 PCP Deal | £1,500 – £3,000 |
| £15,000 PCP Deal | £2,000 – £4,500 |
| £20,000 HP Deal | £2,500 – £6,000 |
Each case is unique, but many consumers have recovered between £1,000 and £6,000.
People Also Ask
Q1. Can I claim for car finance mis-selling?
Yes, if you had a PCP or HP agreement arranged before 28 January 2021 and weren’t told about the dealer’s commission or were charged a higher rate than necessary, you may be eligible for a claim.
Q2. How do I know if my car finance was mis-sold?
Look out for signs like unclear interest rates, undisclosed commission, lack of affordability checks, or feeling pressured into a deal. If you didn’t understand all costs involved, it may have been mis-sold.
Q3. How far back can I claim for car finance mis-selling?
Claims can typically go back up to six years, but it depends on when you became aware of the mis-selling. In some cases, older agreements may still be eligible.
Q4. Do I need a solicitor to make a car finance mis-selling claim?
While you can submit a claim yourself, working with a solicitor can increase your chances of success. National Claims can connect you with experienced solicitors who specialise in these cases.
Q5. Which car finance companies are under investigation?
Many major lenders are being reviewed, including those associated with dealerships like Volkswagen Financial Services, BMW Financial Services, Black Horse, and Santander Consumer Finance, among others.
Why Act Now?
There’s expected to be a surge in claims as awareness grows and more people realise they’ve been mis-sold.
Many claims are time-limited. Waiting too long may risk missing out, especially as deadlines may apply once the FCA publishes its findings.
By acting now, you’ll avoid delays, and your case will be assessed early—potentially putting you in line for faster compensation.
Final Thoughts
With this major update and the FCA’s ongoing investigation, UK drivers finally have a chance to fight back against years of unfair finance practices.
If your car finance was mis-sold, you may be entitled to claim back thousands of pounds. The sooner you act, the better your chances of receiving compensation.
Contact National Claims today, and we will put you in touch with an expert solicitor who can guide you through the claims process.📞 Call us now free 0800 029 3849 or 📩 Submit an online enquiry to speak to our team. Your safety and well-being matter, and we’re here to help.
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