What is a PCP contract?

PCP contracts are Personal Contract Purchase agreements. This kind of agreement is typically used when a consumer wishes to purchase a vehicle ‘on finance’ i.e. the consumer cannot typically justify outlaying the cash price of a vehicle and will instead make monthly payments. PCP agreements usually run for a fixed term (between 36 and 48 months). Typically, the consumer will pay a deposit to the finance company followed by a fixed number of monthly payments. However, the consumer will not own the vehicle at the end of the agreement and will instead have an ‘optional final payment’ or ‘balloon payment’. This is usually a much larger final payment than the regular monthly payment (many thousands of pounds). Should the consumer make the optional final payment, they will take ownership of the vehicle. Usually, consumers do not pay the optional final payment and instead return the vehicle to the dealership or ‘trade’ it in for another vehicle.

How do I know if I’ve been mis-sold PCP?

Unfortunately, a consumer cannot tell if they have been mis-sold a PCP agreement just by looking at their finance documentation. PCP mis-selling is predominantly concerned with the payment of a secret commission from the finance company to the dealership. With that being said, the easiest way to determine whether you may have been mis-sold a PCP agreement is to look at the interest rate on your finance agreement. Typically, the higher the interest rate, the higher the chance that a secret commission payment has been made to the dealer and a PCP contract has been mis-sold.

There are however many factors that need to be assessed when analysing the merits of your claim, such as the overall value of the car your purchased compared to the size of the deposit you paid and whether you feel that correct affordability checks were carried out regarding your financial circumstances.

How do I find out if I’m eligible to claim?

To find out if you are eligible for a claim, please send copies of your finance agreement documentation to PCP@johnsonlawgroup.co.uk . Once we have received your documentation, a member of our PCP team will review it and advise if you are eligible to make a claim.

What information do I need to provide to be able to claim?

In order to make a claim, we need a copy of your PCP finance agreement. It will also be of assistance to know the date of the final payment made on your finance agreement. If you don’t have a copy of your finance agreement, we can request a copy from your finance company – but you will need to remember which company your finance agreement was with.

What is the significance of the recent FCA announcement?

The announcement is significant for consumers as it demonstrates just how seriously the FCA are taking the issue of mis-sold car finance.

The Financial Conduct Authority (FCA) recently announced that it was going to undertake work in the motor finance market. Subsequently, the FCA placed a pause on the 8-week deadline finance companies had to provide a final response to the consumer once a complaint had been made by the consumer. The pause has been introduced to prevent disorderly, inconsistent, and inefficient outcomes for consumers whilst the FCA assess the issues and determine the best way forward.

How much compensation could I be eligible for?

How much compensation you may be eligible to receive depends on the amount of commission paid to the dealership by the finance company. It also depends on how much the dealership used their discretion when setting your interest rate. If the dealer set your interest rate at the highest available to them, you may be eligible to more compensation.

Clients are expected to receive between £1,000 – £3,000. Do not believe the hype however! We would recommend you stay clear of companies promising tens of thousands in compensation. JLG have been successfully bringing these claims in the court for the last 3 years and the usual claim value is either repayment of the commission that was paid or the difference in interest rates between what you were charged and what you should have been charged if you were treated fairly.

Has anyone had a successful PCP claim?

Yes! Numerous consumers have successfully won PCP claims resulting in their finance company being ordered to pay compensation. Following recent decisions by the Financial Ombudsman Service, we are expecting to see a rise in successful PCP claims for consumers.

How long do PCP claims take?

As this is a relatively new area of law, there is currently no definitive timescale that can be provided. However, most clients can expect that their claim will be resolved within the region of 12-24 months.

How much does it cost to make a PCP claim with Johnson Law Group?

You will not be required to pay anything upfront in bringing a PCP mis-selling claim with Johnson Law Group. We conduct these claims on a no-win, no-fee basis, meaning that unless your claim is successful, you will not pay a penny. If your claim is successful, our fee is taken from your compensation, meaning that you will never be out of pocket for bringing a PCP mis-selling claim with us.

More information about our fees and how a no-win, no-fee arrangement works can be found in our client care pack.