Guide 27 August 2025 | Shannon Smith O'Connell |
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.
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.
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:
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.
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:
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.
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:
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.
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:
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:
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.
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.
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.
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:
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:
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:
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:
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:
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:
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.
A rejected PSA Finance claim isn’t the end of the road yet. You still have numerous options, as stated below:
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.
Yes, if you were mis-sold PCP or hire purchase through PSA Finance, you may be entitled to compensation.
The FCA has suggested average payouts of around £950 per agreement, though some may be higher or lower.
Yes, you can still make a claim even if your PSA PCP has finished or the car has been sold or returned.
If PSA Finance rejects your complaint, you can escalate it to the Financial Ombudsman Service for an independent decision.
You can make a claim yourself, but many people choose regulated claims firms for support with the process.
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