Updated: 03 October 2025

Originally Published: 21 May 2025

The Personal Contract Purchase (PCP) system remains the dominant means of automobile financing in the United Kingdom. PCP allows customers to pay monthly installments with the option of keeping their car or returning it when the contract concludes. PCP financing has gained widespread use despite its problematic history which includes several instances of mis-selling through inflated rates and undisclosed commissions. PCP car finance claims have become prominent again in financial redress discussions due to consumers becoming more informed and financial watchdogs implementing stricter oversight.

The common belief that complaint submission periods have ended does not match the actual situation. In a market still recovering from hidden lending practices and discretionary commissions, consumers continue to rely on PCP claims as their essential tool as a vital way to seek compensation.

The Current Financial Climate and Consumer Vulnerability

As inflation and the cost of living soar, UK households are reflecting on financial choices they have made in the past. This includes how they purchased their cars, with monthly payment amounts that they thought were fair and reasonable, now under review.

Consumers are realising that small overcharges or vague contract terms can amount to hundreds or even thousands of pounds over the life of a PCP agreement. Many people now search for car finance claims check tools and online resources following their recent interest in uncovering potential mis-selling of car finance from past years.

At a time when every pound matters, identifying mis-sold vehicle finance agreements is no longer just about principle: it’s about financial survival.

Why PCP Claims Still Matter

The high car finance PCP claim volumes persist even after recent complaints because there are valid reasons for their numbers. The Financial Conduct Authority (FCA) continues its investigation into motor finance sector practices with a particular focus on discretionary commission arrangements (DCAs), which allowed dealers to manipulate interest rates for profit. This practice is now banned.

The majority of customers remained uninformed about these commissions, which led to higher borrowing expenses they unknowingly paid. Buyers often did not receive comprehensive information about balloon payments which mandate large final sums to secure ownership of the car or about mileage restrictions that impose significant fees when crossed.

These undisclosed terms can lead to long-term financial consequences if they remain unresolved. The failure to fully understand contract terms can lead consumers to negative equity situations and unexpected early termination fees. PCP car finance claims enable consumers who have been wronged to receive appropriate compensation and correct financial wrongs.

Common Grounds for Filing a PCP Claim Today

PCP mis-selling has been problematic for many years yet the reasons to file a claim continue to hold their relevance in the present day. Common examples include:

Discretionary commissions: 

Discretionary commissions were a practice where dealers could increase the interest rates on your car finance agreement in exchange for a larger commission. Dealership arrangements kept hidden from consumers resulted in unnecessarily higher finance charges. The dealership or broker had the discretion to change your rates, which likely resulted in you being charged more than necessary, leading to a mis-sold agreement. Disclosure of these commissions needs to be verified as non-disclosure gives grounds for a claim.

Inadequate explanation of balloon payments: 

The balloon payment is the final lump sum payment needed to fully own the vehicle after completing a PCP contract. The consumers lacked proper information about how the payment would impact the total car price and received details about the balloon payment only when the contract ended. The unclear terms resulted in financial stress and confusion for consumers when they reached the payment deadline at the end of their agreement. The basis for a mis-selling claim can arise if consumers were not given a clear explanation at the point of signing the agreement.

Unclear mileage limits: 

The majority of PCP agreements set annual mileage limits and drivers who surpass these limits face significant fees after their contract ends. Consumers often remained uninformed about the fee calculation method and the complete range of penalties for surpassing the mileage threshold. Lack of detailed information causes the agreement to appear unfair while generating unexpected financial duties after contract termination. Hidden terms or failure to properly explain them allows for the filing of a complaint.

Lack of affordability checks: 

One of the key requirements for a responsible lender is that they conduct a thorough affordability check before offering a loan. When selling PCP agreements, lenders often did not check if consumers could handle their monthly payments throughout the duration of the contract. The failure of a lender to properly evaluate your financial status, followed by offering you an unaffordable agreement, may be considered mis-selling. At the time you agreed to the terms, you must check whether a cost-availability evaluation occurred.

Each of these issues highlights the importance of transparency and informed consent, both of which are cornerstones of fair lending. When these are absent, consumers have a right to question the legitimacy of the agreement and seek a vehicle finance refund where appropriate.

How the Landscape Has Shifted Since PPI

Payment Protection Insurance (PPI) mis-selling became the UK's biggest financial scandal. Consumers remained unaware that they had been billed for insurance products they neither required nor understood and did not agree to purchase. Following extensive public awareness efforts and regulatory interventions, consumers received refunds totaling more than £38 billion [1].

In many ways, car finance is following a similar trajectory. While not as widely publicised as PPI yet, the scale of mis-sold car finance in the UK is becoming harder to ignore. Several finance claims experts, along with consumer advocates, consider car finance to be the upcoming financial claim wave driven by growing consumer awareness about its warning signs.

What makes PCP different is the complexity of the product. Unlike PPI, which was a single add-on, PCP agreements involve multiple layers, including interest rates, fees, mileage caps, and final payments. The intricate nature of derivative products raises challenges for regulatory monitoring of mis-selling because offenses can remain difficult to uncover even when easily concealed in complex structures.

Key Events in 2025 

Significant court rulings and regulatory announcements in 2025 that have an important impact on all car finance and PCP claims against all lenders

Supreme Court ruling (August 2025) [2] – The Supreme Court ruled that not all commissions are illegal. But the existence of secret or excessive discretionary commissions can still result in an “unfair relationship” under consumer credit law. Millions of potential mis-sold car finance claims remain outstanding and could still be worth pursuing for compensation.

If you have already made a complaint and are still waiting for a response from your lender, the FCA has given them until after 4 December 2025 to deal with those complaints [3]. If you’re not happy with the outcome of the first stage resolution or you have not heard back from your lender within a reasonable period of time, you have the option to escalate the matter to the Financial Ombudsman Service (FOS).

Redress scheme consultation (October 2025) [4] – The FCA will open a six-week consultation on a UK-wide redress scheme for mis-sold car finance agreements. The final rules could be published early in 2026 with the first batch of lender compensation payments to be made soon after.

Average payout guidance – In guidance published alongside the final rules, the FCA has indicated that the average payout per claim where a discretionary commission arrangement is involved is likely to be around £950 per agreement [5]. The true value of mis-sold claims can vary significantly depending on the size and length of the original finance deal, with some customers potentially eligible for far more.

Armed with new car finance claims UK information, consumers may be able to reclaim unfair overpayments they have made.

What Consumers Should Do Now

If you financed a car using PCP in the last ten years, now is the time to review your agreement. 

Here’s what you can do:

Review your original paperwork for any mention of commission, interest rates, or balloon payments. 

The first thing to do is locate your finance agreement along with all of its terms and conditions, payment schedule and any other documentation such as e-mails and brochures that you received at the time you signed the agreement. Review your finance agreement to see if the interest rate was clearly stated as well as any evidence of a commission paid to the dealer or broker. Ensure that the balloon payment was properly disclosed and that it matches up with the verbal information you were given. These will be valuable pieces of evidence to support your legal claim.

Use a trusted car finance claims check tool to assess whether your agreement shows signs of mis-selling. 

You can use online tools to swiftly determine whether your agreement contains warning signs such as excessive interest rates or unclear fees and missing affordability checks. You can obtain these free checks to help determine if you were mis-sold initially. The analysis process starts by acquiring basic vehicle information such as make and model together with details about the finance term and total payment amount. The findings will guide your decision about whether additional steps need to be taken.

Seek professional guidance from claims specialists who can help evaluate your eligibility. 

With customised advice from professional claims advisers, you can handle confusing agreement details and next steps. Seasoned finance claims experts possess the skills to communicate effectively with lenders while knowing which documents will strengthen a claim. Most advisers work with a no-win, no-fee model which allows you to assess your options without having to pay upfront fees. Their expertise also helps you avoid mistakes that could delay or jeopardise your claim.

File a complaint directly with your lender, or escalate it to the Financial Ombudsman Service if necessary. 

When you're happy with your paperwork and supporting evidence, you can make a complaint to the lender who sold you the PCP finance. You can also choose to work with a Claims Management Company (CMC) or claims specialist to help manage the process. Your complaint should detail the reasons you think the agreement was mis-sold and provide supporting evidence. 

You may escalate your complaint to the Financial Ombudsman Service (FOS) if the lender fails to resolve the issue or dismisses your complaint without just cause. The FOS examines financial disagreements between users to issue decisions that defend consumer rights through an unbiased assessment process. However, the FCA has extended the eight-week deadline for lenders to respond to motor finance complaints [6] involving discretionary commission arrangements (DCAs) until after December 4, 2025. The extension seeks to protect consumers and businesses against undesirable results arising from inconsistent approaches by the FCA as they conduct their review into commission arrangements.

Even if you’ve completed your contract or no longer own the car, you may still be eligible for compensation. Many consumers wrongly assume that once the contract ends, they have no recourse, but that’s simply not true under UK law.

Conclusion

PCP car finance has helped millions of people afford vehicles that might otherwise have been out of reach. The issues related to mis-sold car finance or bad product sales, concealed costs, and optional commission payments in car financing produced an unfavourable truth about many initially deceptive deals.

Now more than ever, PCP car finance claims remain a powerful way for consumers to assert their rights and recover money they may never have realised was wrongly charged. With the cost of living still high and regulatory scrutiny increasing, reviewing your old agreements could be a smart financial move.

The level of PCP mis-selling activities has already approached the breadth of the notorious PPI compensation scandal that affected UK banking institutions. Consumers are strongly encouraged to explore their options. If you're unsure whether your car finance was fair and transparent, now is the time to take action. Use a car finance claims check or speak to a specialist to uncover whether you're owed a vehicle finance refund. It’s your right to ask the questions, and your opportunity to be compensated if you were misled.

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1. With the PPI mis-selling, consumers received refunds totaling more than £38 billion - https://www.fca.org.uk/consumers/ppi-complaints
2. Supreme Court ruling (August 2025) - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
3. the FCA has given lenders until after 4 December 2025 to deal with those complaints - https://www.fca.org.uk/news/statements/firms-given-until-december-2025-respond-motor-finance-commission-complaints
4. Redress scheme consultation (October 2025) - https://www.fca.org.uk/news/statements/fca-consult-compensation-scheme-motor-finance-customers
5. the FCA has indicated that the average payout per claim where a discretionary commission arrangement is involved is likely to be around £950 per agreement - https://www.birminghammail.co.uk/motoring/motoring-news/14-million-drivers-could-receive-32193839
6. motor finance complaints - https://www.fca.org.uk/publications/policy-statements/ps24-18-further-temporary-changes-handling-rules-motor-finance-complaints