Updated: 3 June 2026

Originally Published: 26 May 2025

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PCP claims have become one of the biggest consumer finance stories in the UK.

Over the past decade, millions of motorists used Personal Contract Purchase agreements to finance vehicles because PCP offered lower monthly payments and flexible end of agreement options compared with many traditional finance products.

For many drivers, those agreements worked exactly as expected.

Others are now revisiting older agreements after discovering that important information may not have been explained clearly during the sales process.

Since this guide was last updated in March 2026, the conversation around PCP refund claims has moved on quickly. On 30 March 2026, the Financial Conduct Authority confirmed its nationwide motor finance redress scheme [1], setting out how compensation may be handled for millions of agreements signed between 6 April 2007 and 1 November 2024.

Meanwhile, some of the scheme's aspects have been subject to legal challenge by Consumer Voice and the lenders Mercedes-Benz Finance, Volkswagen Financial Services and Crédit Agricole [2]. These challenged parts of the FCA's proposed approach to calculating compensation and its implementation. The scheme itself is still progressing, but these legal challenges have added uncertainty over timing and may lead to further delays as the wider process continues.

That development transformed PCP claims from a growing complaints issue into one of the UK’s largest consumer compensation programmes.

Motorists are now asking:

• what are mis-sold PCP car finance claims?
• how does PCP mis-selling happen?
• how do I check car finance claim eligibility?
• what compensation could be available?
• what does the FCA redress scheme actually cover?
• should I use a PCP claims company?
• how do I avoid PCP claim scams?

This guide breaks down the full context around PCP finance claims in 2026, from the inner workings of PCP agreements to why complaints skyrocketed in number, red flags consumers should watch out for, and how the claims process operates under the FCA’s current guidelines.

What are PCP claims?

PCP claims are complaints about Personal Contract Purchase agreements that may have been set up in an unfair way at any time between 6 April 2007 and 1 November 2024. This is the primary timeframe for the FCA car finance redress scheme.

A PCP agreement itself is not automatically unfair.

The issue is whether key parts of the finance agreement were explained properly before the customer signed.

Many PCP compensation claims focus on:

• hidden commissions
• inflated interest rates
• unclear balloon payments
• weak affordability checks
• poor explanation of total borrowing costs
• pressure selling during the finance process

In some cases, dealerships could increase a customer’s interest rate and receive larger commission payments from lenders in return. Many customers say they never understood this at the time.

If you want a more detailed breakdown of eligibility and how PCP finance claims work, see our guide to what PCP finance claims are and whether you may qualify.

Why PCP became so popular in the UK

PCP car finance expanded rapidly throughout the 2010s because it made newer vehicles appear more affordable.

Instead of financing the full value of the car during the contract, borrowers only financed a portion of the vehicle's depreciation during the monthly payment period. The remainder was postponed until the end via a balloon payment.

This structure often created:

• lower monthly repayments
• easier access to newer vehicles
• regular upgrade cycles
• flexible end of agreement options

For dealerships and lenders, PCP also became highly profitable.

For consumers, however, the structure could sometimes become confusing, especially where the long term financial implications were not explained clearly.

If you want a full breakdown of how these agreements operate, read our complete guide to how PCP car finance works.

Why PCP claims are increasing

Several factors contributed to the rapid increase in car finance claims across the UK.

The first is scale. Millions of PCP agreements were signed during the review period now being examined by regulators.

The second is awareness.

Many consumers only started questioning their agreement years later after:

• reviewing old paperwork
• comparing interest rates
• reaching the end of the agreement
• struggling with balloon payments
• learning more about commission structures

Regulatory investigations and court rulings also brought national attention to the issue.

What originally appeared to be isolated complaints gradually developed into the wider car finance scandal now affecting lenders across the UK market.

For more context on why complaints accelerated so quickly, see our analysis of why PCP car claims became such a major consumer issue.

What is PCP mis-selling?

PCP mis-selling refers to unfair or misleading conduct during the sale of a Personal Contract Purchase agreement.

One of the biggest issues involved discretionary commission arrangements, often called DCAs.

Before January 2021, some dealerships and brokers could increase a customer’s interest rate and receive larger commissions from lenders in return.

The FCA later concluded that these arrangements created conflicts of interest and banned them on new agreements from January 2021 onwards [3].

However, historic agreements signed before the ban remain under scrutiny.

A lot of mis-sold PCP claims are now centring on the question of whether customers were:

• made aware of how interest rates were calculated
• advised whether commission influenced the price
• told the total amount they'd repay
• warned of the size of the balloon payment
• briefed on end of agreement terms

The three main types of unfair car finance cases identified by the FCA

As the FCA’s investigation expanded, the regulator identified several different types of potentially unfair motor finance arrangements affecting agreements signed between 2007 and 2024.

These are now central to many PCP claims and car finance claims across the UK.

1. Discretionary commission arrangements (DCAs)

Discretionary commission arrangements allowed some dealerships and brokers to increase a customer’s interest rate in exchange for receiving larger commission payments from lenders.

This meant consumers could potentially pay more for borrowing without understanding why the interest rate had increased.

The FCA later concluded these arrangements created a conflict of interest and banned DCAs on new agreements from January 2021 onwards.

2. Unfair or excessive commission levels

The FCA also identified cases where the commission paid may have been excessive or poorly disclosed, even where discretionary commission arrangements had not been used.

In other cases, customers claim they were told only very general comments such as:

• “commission may be paid”
• “the dealer may receive payment”

Many consumers argue these disclosures failed to explain properly:

• how much commission was involved
• how commission affected pricing
• whether cheaper finance options existed

These cases now form part of many modern mis-sold PCP claim investigations.

3. Tied lender arrangements and restricted lender choice

Another area of concern involved situations where dealerships appeared to favour certain lenders instead of presenting a broader range of finance options fairly.

Consumers felt they were:

• only presented with one finance provider
• discouraged from shopping around
• directed to deals that paid the dealership the highest commission

The FCA has investigated if these practices restricted competition and transparency for consumers setting up PCP finance.

Common warning signs linked to PCP mis-selling

Many consumers only realise years later that something about the agreement felt unclear.

Some of the most common red flags were:

• commission was never disclosed
• APR seemed excessively high
• affordability checks were very weak
• only one lender was presented
• focus was on monthly payment in agreement
• balloon payment was not properly explained
• mileage restriction was not properly disclosed
• add ons were thrown in without explanation

These signs do not automatically guarantee compensation, but they are some of the most common issues linked to PCP finance claims.

For more guidance on recognising red flags, read our guide on how to spot and avoid mis-sold PCP finance deals.

The hidden costs that triggered many PCP complaints

A large number of consumers only discovered certain costs at the end of their agreement.

Mileage limits became one of the most common complaints.

Some drivers have commented that:

• charges for excess mileage were not explained clearly enough
• the wear and tear rules felt stricter than expected
• the balloon payment was bigger than they had thought it would be
• returning the car became more expensive than they realised

For some motorists, these costs fundamentally changed the overall affordability of the agreement.

You can read more about this in our guide to hidden PCP costs and mileage cap complaints.

Understanding the legal basis for PCP finance claims

Many PCP claims are based on consumer credit law and unfair relationship rules.

In the UK lenders must:

• treat customers fairly
• transparently explain products
• give clear financial information
• stop misleading sales tactics

If important information was unclear or omitted entirely, this may potentially contribute to a mis-sold car finance complaint.

For a more detailed legal explanation, read our guide on the legal grounds for PCP finance claims in the UK.

What changed in 2026?

The biggest development came on 30 March 2026 when the FCA formally confirmed its nationwide motor finance redress scheme.

The regulator estimates:

• around 12.1 million agreements could potentially fall within scope [4]
• total industry compensation could reach approximately £7.5 billion
• average compensation may sit around £829 per eligible agreement [5]

The scheme mainly covers agreements signed between 6 April 2007 and 1 November 2024.

This changed the conversation dramatically.

Consumers were no longer simply asking whether complaints were valid. They were now asking how compensation would work, when payments may happen, and how the industry would respond.

What are Scheme 1 and Scheme 2?

The FCA compensation scheme will be implemented in two phases.

Scheme 1

Scheme 1 primarily applies to agreements executed between 1 April 2014 and 1 November 2024.

Under current FCA timetables:

firms must implement the scheme by 30 June 2026

outcomes on complaints should start moving forward from that date

• payments are then anticipated through late 2026 and 2027

Scheme 2

Scheme 2 predominantly relates to agreements executed between 6 April 2007 and 31 March 2014.

Under current FCA guidance:

• firms need to implement the scheme by 31 August 2026
• allowance may be needed for older agreements due to historic record tracing
• additional time may be required to locate lenders’ legacy files

If you want a deeper breakdown of expected timelines, see our guide to understanding the PCP claims timeline.

How to check car finance claim eligibility

Many consumers begin by reviewing their agreement paperwork.

Start by checking:

• the agreement date
• the lender
• the APR
• the total repayable amount
• commission wording
• balloon payment details

Look for vague commission phrases such as:

• “commission may be paid”
• “the dealer may receive payment”
• “we may receive commission”

Many customers say these explanations did not properly explain how commission actually affected pricing.

At this stage, many motorists complete a car finance refund check or PCP claims check to assess whether the agreement may potentially qualify for further review.

What is a car finance refund check?

A car finance refund check is an early eligibility review designed to identify whether your agreement may potentially fall within the FCA compensation scheme.

Many checks now only require:

• your name
• date of birth
• address history
• contact details

Finance claims experts can often trace older agreements using credit reference agency data and vehicle registration systems.

This is especially useful where:

• paperwork is missing
• agreements are older
• consumers changed address
• multiple vehicles were financed over time

Can I claim without paperwork?

Yes.

Missing paperwork is extremely common in PCP claims and does not automatically stop a complaint.

Many consumers no longer have:

• original agreements
• settlement letters
• dealership paperwork
• payment records

However, agreements can often still be traced through:

• lender records
• credit reference information
• vehicle registration details
• address history

The PCP claims process explained

The PCP claims process may be different depending on the lender involved, the age of the agreement and whether you make the complaint yourself or via a PCP claims company, but the majority of cases will generally follow the steps below:

Step 1: Fill in a PCP claims check or car finance refund check

Motorists these days start by completing a PCP claims check or car finance refund check online at a claims management company or finance claims expert website.

PCP claims checks or car finance refund checks are a way of establishing whether an agreement might potentially be covered by the FCA redress scheme.

In many cases all a consumer needs to supply is:

• their name
• date of birth
• address history
• contact details

This is very helpful where paperwork has been lost or agreements were signed many years ago. In many instances finance claims experts can trace older agreements using credit reference agency data and vehicle registration systems.

Step 2: Check the details of the agreement

After identifying agreements, the second step is to review how the finance was set up.

This might include examining:

commission wording

• APR levels
• affordability checks
• choice of lender
• balloon payment explanations
• overall borrowing costs

The objective is to determine if there were any indications of PCP mis-selling or unfair finance practices at the time of sale.

Step 3: Submit the complaint

If concerns have been found, the complaint can be submitted to the lender in the form of a complaint stating why the agreement could have been arranged unfairly.

Some consumers do this themselves and others use a PCP claims company or solicitor for assistance.

Step 4: Await lender response

As part of the FCA's current implementation timescales:

• firms processing newer agreements are expected to be ready to run the scheme by 30 June 2026
• firms processing older agreements are expected to be ready by 31 August 2026

Timings will ultimately depend on the lender in question, how old the agreement is and any outstanding legal challenges regarding the FCA redress scheme.

Step 5: Escalate if needed

The complaint may be eligible to be referred to the Financial Ombudsman Service for an independent review if the complaint is turned down or the consumer is not satisfied with the result.

How much car finance compensation could be available?

The FCA currently estimates:

• overall average compensation may be around £829
• newer agreements may average around £881
• older agreements may average around £734

The outcome can include:

• repayment of overpaid interest
• interest based commission refunds
• abusive charges compensation
• additional interest
• credit file corrections (in some cases)

The likely outcome will depend on:

• the size of the agreement
• commission element
• financial loss
• amount of evidence

Choosing the right PCP claims company

Many drivers decide to make a complaint themselves. Others want support from a claims company.

A PCP claims company can:

• help trace agreements
• collect evidence
• talk to lenders on your behalf
• explain FCA timescales
• handle the paperwork

Claims management companies making regulated financial complaints on behalf of consumers must be authorised by the FCA.

Consumers should avoid businesses that:

• guarantee compensation
• use pressure selling tactics
• hide fees
• create false urgency

For more guidance, read our guide on choosing the best PCP claims company.

Are PCP claim scams becoming more common?

Yes.

As awareness of the car finance scandal increased, so did misleading advertising and scam activity.

PCP claim scams often involve:

• guaranteed payout promises
• aggressive cold calls
• hidden fees
• unclear contracts
• fake urgency

Consumers should always check FCA authorisation before signing with any claims business.

Frequently asked questions about PCP claims

What are PCP claims?

PCP claims are complaints linked to Personal Contract Purchase agreements that may have been arranged unfairly between 2007 and 2024.

What is PCP mis-selling?

PCP mis-selling refers to unfair or misleading conduct during the sale of a PCP agreement.

What is a mis-sold PCP claim?

A mis-sold PCP claim is a complaint that a PCP agreement was not sold fairly or transparently.

How to check car finance claim eligibility?

The first thing to check is whether your agreement falls within the main FCA review period, which covers many PCP and Hire Purchase agreements signed between 6 April 2007 and 1 November 2024.

From there, look more closely at how the finance was presented at the time. Many motorists now revisit older agreements after realising they were never properly told:

• how commission worked
• why a particular lender was recommended
• how much the agreement would cost overall
• what the final balloon payment really meant financially

You may also want to review:

• the APR
• the total repayable amount
• any commission wording in the agreement
• affordability checks carried out during the sale
• whether alternative lenders were discussed

Many consumers now start with a car finance refund check or PCP claims check through finance claims experts or claims management company websites. These online checks are usually designed to identify whether an agreement may potentially need further review under the FCA redress scheme.

In many cases, older agreements can still be traced even where paperwork has been lost, particularly if the finance was arranged several years ago or across multiple vehicles.

What is a car finance refund check?

A car finance refund check is an early eligibility review used to identify whether an agreement may potentially qualify for compensation.

Can I claim without paperwork?

Yes. Many agreements can still be traced through lender records and credit reference information.

Are PCP claim scams increasing?

Yes. Consumers should remain cautious of firms using pressure tactics or guaranteed payouts 2026 promises.

For more answers to common questions, see our full PCP claims FAQs guide.

Final thoughts

PCP claims are no longer a niche complaint about confusing car finance mis-selling paperwork. They now sit at the centre of a major regulatory review into how vehicle finance was sold across the UK.

For drivers, the crucial question is not just that they had a PCP. It is whether it was explained, priced and arranged fairly with no hidden incentives adding to the cost.

The FCA redress scheme has given consumers a clearer route to review agreements for 2007-2024. It has also highlighted how commission, balloon payments, affordability checks and lender choice can affect the true cost of borrowing. If you are unsure where you stand, start with the basics. Check when the agreement was signed. Review the APR, total amount payable, balloon payment and any wording around commission. A car finance refund check or PCP claims check can then help you understand whether the agreement may require closer review.

The most important step is to avoid guessing. PCP mis-selling depends on the details of the agreement and what was explained at the time. A careful review gives you a stronger basis for deciding whether to complain yourself or seek support from a regulated PCP claims company.

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References:

1. On 30 March 2026, the Financial Conduct Authority confirmed its nationwide motor finance redress scheme - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
2. some of the scheme's aspects have been subject to legal challenge by Consumer Voice and the lenders Mercedes-Benz Finance, Volkswagen Financial Services and Crédit Agricole - https://consumervoice.uk/cars/fca-car-finance-compensation-challenge/
3. The FCA later concluded that these arrangements created conflicts of interest and banned them on new agreements from January 2021 onwards - https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models
4. around 12.1 million agreements could potentially fall within scope - https://www.fca.org.uk/publication/policy/ps26-3.pdf
5. average compensation may sit around £829 per eligible agreement - https://www.bbc.com/news/live/czx94evl5lrt