Updated: 27 August 2025

Originally Published: 11 November 2024

Thousands of customers have been affected by the UK car finance scandal. It circles the issue of the mis-selling of finance products, unfair contract terms, and hidden commission fees that lead to customers paying more than they should. To help you understand, this guide will walk you through the details of the scandal. In this guide, you will be able to see how you can file a PSA finance claim for a potential refund.

PSA Finance UK’s Role in the Scandal

After it was revealed that the PSA Finance UK, a subsidiary of the PSA Group that deals in auto financing solutions, had misled hundreds of customers who purchased and availed auto finance deals, the group was suddenly put at the centre of a scandal. Its financial products, such as Hire Purchase (HP) and Personal Contract Purchase (PCP) car finance, were the primary cause of the issue. Numerous clients did not know the full financial terms of their deals or of clandestine commission payments, and that created doubts regarding fairness and transparency.

What Was the Scandal About?

Mis-selling of financial agreements, where clients were not properly informed regarding commission terms or unequal contract terms, is the key area of concern of the PSA Financial scandal. In some instances, PSA Finance discretionary commissions based on the customer payment were received by dealers, causing astronomical costs and additional secret charges. A substantial number of PSA Finance products were thus marketed for sale in unfair or misleading manners.

Mis-Sold PSA Finance Agreements

Hidden Commission Fees

The ultimate reason behind the PSA finance scandal was the hidden commissions, which apparently were present too with many car financing contracts. Now considered wrongful, PSA Finance used to base the remuneration they provide dealers and brokers on the interest rate; however dealers would intentionally inflate it, to mean bigger pay for them. 

With this, chances are customers will have to pay more than they initially supposed, because these loan agreements turn out to be more expensive with those commission fees buried in the interest rate. 

Most buyers did not know that dealer incentives were influencing the price of their finance deals because this voluntary commission was not revealed to them when they bought the cars. This has been outright unfair for customers, considering the secrecy, when all transactions are supposed to be transparent. 

For instance, a broker would have been incentivised to offer a greater interest rate or loan amount because it would have meant a larger fee for them. Hidden commission fees are commonly exploitative, as they put buyers at the blindside of where their money is being spent. 

Unfair Contract Terms

Another key concern that you may find tied to mis-sold PSA Finance agreements is unfair contract terms. When we coin unfair agreements or contract terms, we refer to those sections in the contract especially those that were unduly weighted or were written on. These terms refer to clauses within the finance agreement that were not fully explained or were weighted heavily in favour of PSA Finance UK or the car dealership. Common unfair contract terms include:

1. Unclear interest rates: The full cost of borrowing was not disclosed, and the interest charged was more than expected and often not reasonable. Here, customers signed up for a financing scheme without fully understanding how much they really needed to pay.
2. Excessive charges: There is a likelihood that additional charges, such as outrageous late payment charges or unexpected administrative fees, were imposed without proper warning. As a customer, maybe you assumed it was a regular car financing contract, until you’re hit with unexpected financial liabilities as a consequence, because you failed to check what your contract originally stated.
3. Unexplained balloon payments: Often, people do not understand what a balloon payment is, even those who acquire Personal Contract Purchase Agreements [1]. This is often because a lender has failed to explain properly what it meant. This however is a substantial amount that you need to pay if you decide to keep the car. While it is a massive cost, if informed earlier, you could have decided on a different agreement, given the premise that what you want in the end is to own the car too. 
4. Unfavourable early repayment terms: Customers who intended to pay back their loans ahead of time sometimes incurred hefty fees or penalties. Those willing to pay off their debt in full were irked by these conditions, which sometimes were tucked away in the contract's minuscule fine print.

Lack of Transparency

At the heart of the mis-selling issue was a lack of transparency. Whether due to unclear communication, overly complex documentation, or deliberate obfuscation by the dealership or finance provider, many customers were left in the dark about the full scope of their agreement.

A dealer can, for example, stress the low monthly payments without specifying how the interest rate or total cost of the loan can climb over time. Consumers might have assumed they were getting a fantastic deal, they were obtaining a great bargain with low monthly payments only to realise afterward that high interest rates or hidden commission fees resulted in higher overall costs than they had envisioned.

Impact on Customers

Numerous car purchasers have been severely penalised due to mis-sold PSA Finance deals. Buyers have frequently spent more than intended due to over-the-top rates of interest rates, hidden charges, or other uncovered costs. Aside from impacting their short-term financial security, this misselling has made several individuals continue with debt issues for years to come.

In some situations, these unreasonable terms forced clients into finance packages they couldn't afford or didn't fully understand. Meanwhile, in other cases, the hidden commission payments resulted in an inflated price that customers could have avoided had they known the true cost of the deal from the outset.

Why Were These Finance Agreements Mis-Sold?

Customers often received inadequate explanations of the different financing options available to them and were not informed of commission arrangements. PSA auto loan contracts were misrepresented to customers with terms that were neither completely transparent nor fair.

The recent ruling from the Supreme Court last August 2025 [2] provided some much-needed clarity on the legal situation around car finance claims. The judges ruled that not all car finance agreements using a commission structure are automatically unlawful. However, in cases where brokers or dealers mis-sold vehicles with hidden discretionary commissions or unfair mark-ups on interest rates, this could still amount to an “unfair relationship” under consumer credit law. So, the door is open for many PSA finance complaints, and whether or not a claim is valid will depend on the details of the individual case.

Who Qualifies for a PSA Finance Refund?

If you purchased a PSA car finance product in the UK and were not made aware of hidden charges, unfair terms, or discretionary commission fees [3], you may be eligible to claim a refund.

How to Check If You Qualify for a PSA Finance Refund:

• PCP or HP Agreement: If you entered a Personal Contract Purchase (PCP) or Hire Purchase (HP) agreement with PSA Finance UK and feel you were not made aware of the terms, you could be entitled to a PSA Finance PCP claim.
• Undisclosed fees: Commission fees that were charged, but weren’t part of your original contract should constitute mis-selling, making you eligible for a refund. These can be considered as hidden and undisclosed fees, making your claims against your dealer valid.
• Unfair contract terms: If your contract included unfair terms that were not explained to you at the time of purchase, you could be entitled to compensation.

What makes me eligible for a PSA Finance refund?

You are eligible if your finance agreement includes undisclosed fees or if the contract terms were not fully explained at the time of signing. If you were sold a mis-sold PSA finance product or faced hidden commission charges, you could be entitled to a refund.

To guarantee your eligibility, review your PSA finance agreement, and do it religiously. Most likely, you are paid more than you agreed due to secret charges and hidden fees.  Commission fees are sometimes the source of unfair contract provisions, putting the buyer’s interests last. 

1. Review the Paperwork

The first step to verify your eligibility is to go over the paperwork once again. Was the timeline from April 2007 to January 2021? If so, then review the financial deal, terms and conditions, and all other documentation that was issued by the dealer or PSA Financial UK, as this can be critical in determining the validity of your claim. 

• Look for commission costs that were probably concealed in other parts of the contract – You should pay attention to any reference to dealer commission costs, and carefully examine what it’s all about, as this can show a trace of how you were misled.  It’s important to pay close attention to any mention or reference to dealer commission. While it may be mentioned, was it fully accounted for? Those undocumented commissions could have influenced the total cost of the auto loan. 
• Seek discretionary fees – Discretionary commission-based costs mean that the payment of the dealer is tied to the amount you invested, and this is present in most contracts. These charges will be embedded in the overall price or can also be added as part of other fees that weren’t readily apparent in the finance contract. 
• Review added extras – Most dealers will offer you extra services such as extended warranties or GAP insurance as well, so ensure that the values charged reflect what you first agreed upon. These values should be fixed into certain interest rates or fixed costs so you know exactly what you’re paying for. 

2. Highlight Any Charges that weren’t explained properly

After checking every document you have, grab a pen and take note of any charges that were suddenly added to your tab. If you believe these were added out of your knowledge, then it can be considered a sign of mis-selling. There are different ways to hide or clothe a fee or charge. It can be any of these:

• Additional or unexpected fees: These are fees that you do not recall being mentioned. Should there be additional or unexpected fees, it’s best to further your investigation and determine whether these fees were really part of your original contract. Any administration fee or processing fee should have been discussed in the agreement. Early repayment fees are common but still should be mentioned, and if not, it can constitute a mis-sold case. 
• Overly complex or vague charges: If some charges seem unclear, such as “processing fee” or “management fee,” and you do not recall agreeing to them. It was probably added after the initial agreement, which could be a red flag. 
• Hidden interest rate markups: Dealers or lenders sometimes add extra fees to the interest rate or terms of a loan without full disclosure. If this value is significant, causing your total credit cost to increase, then it may be brought about by intentionally altering the terms of the deal without your knowledge. What you can do instead is compare the rate that was originally quoted to you against the one that was listed in your contract to identify any discrepancies clearly. 

3. Check for Interest Rates and Total Cost

One biased way dealers are able to charge you more is by hiking the interest rate of your loan, as this can increase your overall cost without you noticing. It's crucial to ensure that the interest rate and the overall cost of your finance agreement match to avoid being misled. 

• Compare the quoted interest rate to the actual rate: How much interest rate was charged to your contract? Was it the same value that you were told at the dealership? If not, and it was higher than you were led to believe, then you could have been mis-sold. 
• Compute the total cost of the finance agreement: Total up the monthly payments, plus all the additional costs to get a better view of the total amount you will be paying for. If it is significantly higher than the initial cost you agreed upon, then you may have grounds for filing a claim. 
• Loan Breakdown: It's critical that your contract include and specify the entire principal loan amount, plus the interest rates and any other associated costs. Before signing into anything, compare this first with the finance terms provided to you before signing the contract to see if the figures align.

4. Understand the Terms of Your Agreement

In any finance agreement, you should be able to fully understand and grasp what the contract is all about, including terms and conditions and even the fine print. All the costs and charges that are present and can be added upon should be clearly explained to you by the dealer, or in this case, the PSA. Some of the terms in the agreement that can be confusing are the following:

• Balloon payments: Balloon payments are present in Personal Contract Purchase (PCP) agreements, as this is the amount you pay should you decide to purchase the car at the end of the contract. This value should be communicated properly to you by your dealer and should be a fixed value regardless of whether the car depreciates in value. In a fair PCP agreement, you are well informed on how much you will owe your dealer at the end of the term, regardless if you decide to pay the car outright or just choose to trade it in for a newer contract. 
• Charges for early settlement: Pay attention to any provisions that pertain to early financial settlement. Should you be able to pay off your loan, there’s a penalty you have to pay. Once you accept the agreement, it means you are also allowing these consequences to take place. 

5. What to Do If You Find Something Unusual

After a thorough review of your finance agreement, if you see something unusual, like hidden charges, unclear terms, and other fees, then you can confirm you’ve been mis-sold. Now you have to act fast if you want to get a refund or compensation for being mis-sold a PSA finance product. Here are the next steps you can take:

• Document everything. Take notes and photos and duplicate all evidence that shows you were mis-sold. It can include all the unusual and unclear charges seen and everything in the contract that is different from what you agreed upon. Keep a record of the original quotes and all communications you had with the dealer or the lender, such as message and email threads. 
• Tap a finance claims expert: If you don’t feel confident or are unsure about the terms and charges, then going to a PCP expert isn’t a bad idea, either. You can also approach consumer protection groups and legal professionals for professional opinions regarding your claim.
• File a claim: If you suspect that you were mis-sold your car finance agreement, you should file a formal PSA finance claim online or contact PSA Finance UK directly to seek a refund for any unfair charges or hidden fees.

For the time being, the FCA has said it will extend its pause on commission-related complaints until 4 December 2025 [4]. While drivers can continue to submit PSA finance claims today, most of these will remain on hold until the regulator finalises its consultation and introduces formal redress rules. While the pause could delay the resolution of valid complaints, the FCA said it was necessary to ensure consistency across the sector and avoid divergent decisions.

How do I spot hidden charges in my PSA car finance agreement?

Hidden charges are the fees that are blanketed in the fine print or added on top of other fees so you won’t notice them. To know if you were charged hidden fees, then look for any fees or terms that do not sound familiar to you or were not disclosed at any time of the sale. Pay special attention to any mentions of commission or charges that could have been influenced by the dealer’s payment rather than your own needs and interests. Look for any fees or terms that were not disclosed at the time of sale. Pay special attention to commission fees or charges that could have been influenced by the dealer’s payments rather than your needs.

How PSA Finance Compensation Works

If you’ve been affected by the scandal, PSA finance compensation can come in the form of a refund for any hidden commission fees or overcharges. Here's how compensation and refund calculation typically work:

Refund for hidden commission - If the dealer was paid a commission based on your finance agreement, you may be entitled to a refund of the commission amount, which is basically the amount of commission charged or topped up to your actual cost to pay. For example, if your dealer received a 10% commission on your agreement, then you will be refunded the amount of that 10% or the amount that exceeded the initial payment you agreed upon.

Refund for unfair terms - If your contract contained unfair terms that you weren’t informed about, you could receive a refund of any overpaid amounts as a result of those terms. Your dealer can adjust the payment terms or give you compensation for any financial mishap the unfair term has caused you.

How much can I get from a PSA Finance refund?

The refund you are entitled to depends on the hidden commission fees or unfair contract terms that were applied to your agreement. A full review of your finance contract is required to determine the exact amount.

Nevertheless, the FCA has indicated that, in the case of discretionary commissions, compensation could average £950 per agreement [5]. The amount will depend on the circumstances of the individual finance agreement, so some customers will receive much less while others could be owed several thousand pounds in redress.

The regulator is now gearing up for the next phase of action on car finance claims. In October 2025, the FCA will publish a consultation on how a possible industry-wide redress scheme should work [6]. The consultation is likely to last six weeks, with final rules expected to be introduced early in 2026. At this point, the scheme could apply to thousands of PSA car finance agreements entered into between 2007 and 2021.

How to Make a PSA Finance Claim

If, upon review of your contract, you find out that the PSA finance agreement was mis-sold, as it included hidden charges or other undisclosed fees, then you may be entitled to get a refund or compensation. Making a PSA finance claim can be a straightforward process as long as you understand the process correctly and you follow the right steps that are necessary to make a claim. You also want to avoid the common errors when filing car finance claims. Below is a detailed guide on how to file your claim successfully.

1. Verify your contract

Scan your agreement again but this time, try to look for any mistakes, unexplained fees, or unfair clauses that are unfamiliar to you. All clauses should be properly communicated when you signed your PSA finance claim. Here are the fees you should look out for: 

• Hidden commission fees: Discretionary commission fees have been banned since 2021, and undisclosed commission fees aren’t allowed either. Check your contract for any commission fees that were topped up on your total credit cost. Fees that weren’t disclosed at the time of sale are deemed to be an unfair and unlawful practice.
• Unclear or inflated interest rates: Check the interest rate on your document and the total cost of the finance agreement to calculate whether these two values match and if this is what you originally signed up for. Leading to different values could mean you were misled. 
• Unfair contract terms: In your agreement, were there mentions of balloon payments or early settlement charges? If yes, are the figures accurate? Make sure the terms of your agreement, such as balloon payments or early settlement charges, were clearly explained to you. If not, this could form a strong basis for your claim.

If any of these issues are present in your agreement, it could be grounds for a PSA finance claim.

2. Collect Supporting Evidence

You will need a strong PSA Finance claim if you want to recover how much you were owed, may it be in the form of compensation or refund. To do so, you will need strong evidence as well. Any proof that shows you were mis-sold can be crucial when making a claim, as it helps demonstrate the act of mis-selling too. Here’s what you should collect:

• A copy of your finance agreement – This is the blueprint showing you were misled, as everything about your car finance should be detailed in this document and shall be enforced. It’s also the document that outlines the terms and conditions of your agreement, including the interest rate, any fees, and other charges.
• Communication with the dealer or PSA Finance – Any conversation with your dealer is important as it means there is a valid contract, and also, this will show whether you were misinformed or whether certain charges were hidden from you. Keep any form of evidence you can find, such as emails, letters, or other forms of communication.
• Quotes or promotional materials: Another common cause of mis-selling is misleading promotional materials. Often, what lures you to sign contracts like these is a deal that you find irresistible. If you find any discrepancy between what you were promised and what you received, then any duplicate of the promotional material can be solid evidence.
• Proof of payment: Save all receipts and records of your payment as this will serve as crucial evidence in proving you were mis-sold, as well as the amount of fees that shall be returned to you. You may think it’s unnecessary but having this exactly helps establish how much you will be refunded or compensated. This can help establish how much you have paid over the course of the agreement.

3. Contact PSA Finance

Once you’ve reviewed your finance agreement and gathered all the relevant documents, contact PSA Finance UK to file your claim. You have two main options for doing this:

A. Filing a Claim Online

Contrary to what you may think, filing your PSA finance claim can be done even in the comfort of your home. Also it’s practically the quickest and most convenient method as you can do everything on your computer. Here’s a guide for doing it:

1. Visit the PSA Finance UK website: Check out the official PSA Finance UK website and look for the section dedicated to complaints or claims. In there, you will find a dedicated page for filing compensation claims and disputes.
2. Include all the necessary information on the online claim form: Once you have all the documents and information ready, you will need to fill out a detailed claim form. Some information that you will need to fill out here includes the details of your finance agreement, your personal information, and any relevant evidence to support your case. 
3. Submit your claim: Once you’re done with your form, you can upload the necessary documentation on the website. Be a little patient waiting for PSA Finance UK acknowledgment and prepare on how they might react knowing you’re making a claim from them.

B. Filing a Claim by Post

If you’re not that tech-savvy, worry no more as the conventional method of filing a claim is still effective, and if you prefer doing so in this manner, here are the steps you can take: 

1. Write a formal letter. When you file by post, you need a hard copy of your complaint and you can do so by writing a formal letter which will state the unfair practices you experienced with their service. This is the avenue where you express how you were mis-sold and all the important information, which may help them keep track of. This includes all the important details, like the agreement number, your personal information, and a brief description of whatever issues you encountered. 
2. Include supporting evidence: Since you will be submitting the documents and mailing them, you will need hard copies of your evidence, so ensure that it’ll be printed out. Attach these copies to your formal letter, and ensure that it’s readable and understandable so you’ll have better chances of a successful claim. 
3. Send the letter to the relevant PSA address: To guarantee that PSA Finance receives your claim, you should send it to their correct address. This is easy to find because it is updated on their website. 
4. Wait for a Response

After submitting the claim, PSA Finance UK will start reviewing your case. Typically, it will take a few weeks for the company to determine and assess whether you will be entitled to compensation. Depending on the complexity of your case, here’s what to expect:

• Acknowledgment Receipt: PSA Finance UK will send an acknowledgment that they have received your claim, whether it be via email or another means. It will also include details on the review process, along with the timeline, so you will know.
• Investigation: The company will then investigate your claim and review all your evidence to cross-reference it with their records. If they find any discrepancy, they may contact you to further investigate, but it can also lead to rejection outright. 
• Decision: After reviewing your claim, PSA Finance will then issue a decision on eligibility. They can either accept your claim and issue a compensation or refund or send you a rejection letter if they believe there wasn’t any mis-selling involved. 

What Happens if Your Claim is Successful?

Once PSA Finance UK finds merit in your claim, you will be offered compensation or a refund, but only for the difference caused by the hidden commission fees and overinflated costs. Hence, the refund can also be in the form of a reduction in future payments if the car finance agreement is still ongoing. In addition, if your claim is about the unfair interest rate or other contract terms, then the PSA can also reduce the amount you owe them. 

What Happens if Your Claim is Denied?

A rejected PSA Finance claim isn’t the end of the road yet. You still have numerous options, as stated below:

• Request a review: After a rejection letter, you will know what caused the refusal of your claim. If you believe you have provided everything necessary to support your claim, then you can ask your dealer to review their decision. Should there be a need for supporting claims, then you can submit additional evidence too, as a second look at your case may lead to a different outcome. 
• Tap the Financial Ombudsman: If PSA Finance refuses your claim or doesn’t offer satisfactory compensation, then it’s time to bring the matter up to the Financial Ombudsman Service. They can be your best option, as this intermediary body has helped thousands resolve their issues related to finance. Also, they can be trusted to investigate your complaint and help resolve the issue.
• Seek legal advice: If you believe your case is strong and you need more action to be taken, then seeking legal advice from a consumer rights solicitor or a PCP claims company with finance claims experts may help you pursue a claim in court.

Conclusion

Many clients have questioned PSA loans’ credibility since the mis-sold instances came to light. Prospect customers are wondering particularly about the vehicle loan scandal and what the group has been doing to mitigate the concern. If you were affected, it's crucial to know the steps you need to take, such as checking your contract for hidden charges and learning exactly how compensation works. Whether it’s about compensation or a PSA finance refund, having the right knowledge makes the process straightforward and easy. Now you don’t have to worry about those overpaid amounts, as taking action will help you reclaim what you are owed. 

Frequently Asked Questions

Can I make a claim against PSA Finance?

Yes, if you were mis-sold PCP or hire purchase through PSA Finance, you may be entitled to compensation.

What is the average payout for PSA Finance claims?

The FCA has suggested average payouts of around £950 per agreement, though some may be higher or lower.

Can I still claim if my PSA PCP has already ended?

Yes, you can still make a claim even if your PSA PCP has finished or the car has been sold or returned.

What happens if PSA Finance rejects my complaint?

If PSA Finance rejects your complaint, you can escalate it to the Financial Ombudsman Service for an independent decision.

Do I need professional help with a PSA Finance claim?

You can make a claim yourself, but many people choose regulated claims firms for support with the process.

__________

References:

1. FCA looking into Personal Contract Purchase Agreements - https://www.theguardian.com/money/2024/jan/11/car-finance-what-is-the-fca-looking-into-and-will-people-get-money-back
2. recent ruling from the Supreme Court last August 2025 - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
3. FCA bans discretionary commission fees - https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models
4. FCA has said it will extend its pause on commission-related complaints until 4 December 2025 - https://www.fca.org.uk/news/statements/firms-given-until-december-2025-respond-motor-finance-commission-complaints
5. the FCA has indicated that, in the case of discretionary commissions, compensation could average £950 per agreement - https://www.thesun.co.uk/money/36207624/get-pound950-car-finance-compensation/
6. In October 2025, the FCA will publish a consultation on how a possible industry-wide redress scheme should work - https://www.fca.org.uk/news/press-releases/fca-consult-motor-finance-compensation-scheme