Personal Contract Purchase (PCP) deals have come under increased scrutiny since the FCA ruling on car finance and its broader inquiry into mis-sold motor finance. Yet, consumers are often confused about whether they retain a legitimate mis sold PCP claim if they rolled over their agreement ahead of the initial term's conclusion.

This situation causes confusion for thousands of drivers. If you've signed a new contract to refinance your car—same lender or new one—you may think you've given up your right to seek damages. The truth is, you may not have.

Does Refinancing Cancel Your Right to Claim?

Taking out a new PCP loan will not necessarily prevent you from filing a claim. The structure of the original agreement and the presence of undisclosed commissions or unfair terms determine your eligibility for compensation.

The FCA position on modified or replaced agreements is clear: consumers have a right to compensation for sales misconduct irrespective of subsequent events. The process of refinancing or voluntary termination as well as early settlement fall under the FCA position on modified or replaced agreements.

Let's explore each of these scenarios:

• Refinancing - Refinancing a PCP contract means replacing your current finance arrangement with a new one, possibly in order to negotiate improved terms or reschedule repayments. The ability to claim remains available if you have been misled about the original financial arrangement through undisclosed commissions, hidden fees or excessive interest rates. The FCA maintains that actions for mis-selling at the point of sale remain valid despite any subsequent refinancing of the contract.
• Voluntary Termination - Consumers can end their PCP contract ahead of time through voluntary termination once they've paid half of the total payment amount. Choosing this option maintains your ability to pursue claims if the agreement was originally mis-sold. The guidelines of the FCA advocate redress for consumers where their agreement has been mis-sold, whether or not they served out the duration of the agreement.
• Early Settlement - Early settlement means clearing your PCP agreement balance ahead of the scheduled term completion. Early settlement of an agreement does not prevent you from filing a claim for hidden commissions or unfair contract terms. The FCA insists consumers deserve financial compensation for any detriment from mis-selling whether they settled early or not.

The Financial Ombudsman Service (FOS) has examined numerous instances where drivers won a car finance compensation claim despite changing their finance terms before the agreement ended.

The central issue in each case examined by the FOS is whether the original agreement included mis-selling practices. Refinancing your agreement or opting for voluntary termination or early settlement does not impact your ability to claim compensation.

When You Can Still Make a Claim

There are several scenarios in which you may still qualify for compensation even after refinancing:

• If the original agreement was mis-sold. The most common issue involves lenders failing to disclose commissions paid to brokers or dealerships. If this was never properly explained, you may be eligible for a refund on interest or fees.
• If the refinancing carried over unfair terms. Some lenders roll over similar interest rates or commission structures without offering consumers any meaningful benefit. If the new deal mirrored the issues in the first agreement, your case for mis-selling becomes even stronger.

Even if your new finance deal seems unrelated, the initial sale process is still open to scrutiny—especially if it influenced your decisions.

Key Factors That Influence Claim Viability

If you're considering using a PCP claims checker, here are some important variables that affect whether your mis-sold PCP claim is likely to succeed:

• Timing of the refinance - If you refinanced early in the original PCP term, the proportion of interest paid up to that point may still be subject to compensation. The terms of any new agreement need more thorough examination during late-stage refinancing.
• Documentation and interest rates - You’ll need access to your original agreement and any details of how interest was calculated. A significant disparity between the interest rate you received and market rates could signal commission-based mis-selling.
• Discretionary commissions carried over - If the same dealer or broker handled both agreements and received commission again, this strengthens the case that you were unaware of how your financing costs were structured.

Professional PCP claims company services often have the tools to evaluate these variables and confirm if your refinancing affected your eligibility.

What Documents You Need

The success or failure of your case depends on the accuracy of your paperwork. Both independent submissions and those made through a PCP claims company require these critical documents.

• Original PCP agreement - This is essential for identifying the terms of the sale, interest rates, and whether commission structures were disclosed.
• Refinancing agreement and settlement letter - These documents confirm when and how the refinancing took place. They also show whether the same terms or providers were involved in both deals.

In many cases, your lender is obligated to provide copies of these documents upon request. You can also contact the dealership or broker if you believe they facilitated the mis-selling.

Example Claim Outcomes

The Financial Conduct Authority (FCA) explained that customers are legally entitled to redress for sale-point misbehaviour, irrespective of later amendment of the agreement. This applies to situations where the initial agreement was mis-sold in terms of undisclosed fees or higher-than-marketed interest charges.

Refinancing doesn't eliminate your right to a claim, but it may impact the size of your refund. Consumers have seen a range of outcomes depending on the specifics of their agreements.

Realistic Expectations for Refunds After Refinancing

The level of compensation varies based on the specific details of every case. The FCA says consumers overcharged as a result of discretionary commission arrangements may be entitled to an average refund of about £1,100 on a typical £10,000 four-year car finance deal. But some people have claimed much more, depending on how badly they have been mis-sold and the length of their finance deals.

Case 1: Marcus Johnson's Experience

Marcus Johnson, 34, from Cwmbran, found that he had been charged a 25% commission on his car finance agreement without him knowing. According to a CA decision, lenders cannot start paying commission to car dealerships without the knowledge or agreement of borrowers. The decision has paved the way for drivers like Marcus to claim compensation for mis-sold motor finance deals.

Case 2: Santander's Compensation Payouts

The bank Santander has set aside £295 million to reimburse customers who received mis-sold car finance agreements. Thousands of customers who received hidden commissions will receive £1,100 compensation from the bank. The action taken by Santander illustrates the vast scope of the car finance mis-selling scandal.

These examples demonstrate that consumers who refinanced their PCP agreements can obtain compensation for mis-sold initial contracts. Obtain professional assessment to ensure eligibility after reviewing your car loan agreement.

The Financial Ombudsman Service often rules in favour of the consumer when there’s clear evidence of non-disclosure or unfair contractual terms.

Conclusion

Refinancing your PCP agreement does not automatically cancel your right to claim. Even if you only discovered issues with your deal later, you could be eligible for compensation, particularly as they continued into your refinancing package.

It's important to gather your documents and check your eligibility with a reputable PCP claims company or use a reliable PCP claims checker. The best way to move forward is by reviewing your agreement details and understanding how the FCA ruling on car finance applies to your situation.

Check your eligibility for car finance compensation claims now through Reclaim247’s claim checker.