Car Finance Claims FAQ

Who are we?

We are Elsworth Associates t/as CP Financial Claims, a claims management firm regulated by the FCA (Financial Conduct Authority – FRN: 834626).

What do we do?

We specialise in helping clients who have suffered losses involving pensions or investments. We process claims via the Financial Service Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS) . We have represented thousands of clients since 2017 and have achieved an 89% uphold rate with the FSCS (the highest in the country), in 2023. We are now helping clients with PCP claims.

What is a PCP?

A Personal Contract Purchase is a type of finance to buy a vehicle. While the term has no legal definition, it is used by finance companies when marketing hire purchase or loan agreements. Unlike traditional hire purchase agreements where, at the end of the term, consistent monthly payments will result in ownership, a PCP involves lower monthly payments with a large "balloon payment" due at the end - up to half the vehicle's value. It is only when this final payment is made that ownership is transferred.

Why do car salespeople like PCPs?

PCPs are good for car manufacturers, too, as most customers choose to return their car at the end of the agreement rather than pay the balloon payment. This invariably results in another PCP contract and so can tie a customer to a particular brand and retain brand loyalty.

What are the disadvantages of PCPs?

PCPs can be a good fit for customers who prefer to change their car every 2 to 4 years. However, for those aiming to own their car outright, a PCP is often more expensive. Compared to a standard hire purchase or personal loan, PCP agreements typically result in higher overall interest payments.

Why are PCPs under scrutiny?

PCPs have been under increased scrutiny since the FCA review of the motor finance sector in March 2019. It emerged that some customers were paying up to a 20% more for their finance due to the way lenders were incentivising brokers, including car salespeople, to sell deals. Lenders, for example, were encouraging brokers to promote PCP agreements, which is most likely because PCP agreements tie customers into a particular brand.

How do lenders incentivize car salespeople to sell PCPs?

Lenders often offer higher commission rates to salespeople for selling PCP agreements. This financial incentive encourages brokers to prioritize PCPs over other financing options.

Was I mis-sold a PCP?

If you were not informed about the commission paid to the salesperson by the lender, your PCP agreement may be considered unfair under Section 140A of the Consumer Credit Act 1974. Showing this unfair relationship can give you a right to claim compensation.

What if I don't have my PCP sales agreement?

You can still claim. Lenders must legally keep customer transaction records for at least six years. Under UK data protection laws, you can request a copy of your sales agreement and related documentation using a Data Subject Access Request (DSAR).

How long does a PCP claim take?

The time scale for the resolution of the claim depends on a few factors, such as availability of documents and response by the lender. In an ideal case, a claim may get resolved within four months.

How much compensation could I receive?

The amount is, of course, tied to the loan size and rate of interest applied. FCA estimates suggest that in a typical £10,000 PCP agreement, customers may overpay about £1,100 in interest on it. If the compensation were found unfair, it would be that amount awarded as compensation. Compensation for higher-valued vehicles would, of course, be significantly more.

Can I make a claim for several PCP agreements?

Yes, you can make a claim for any PCP agreements you have taken out in the last 10 years.

What if my claim gets rejected?

If your claim is rejected, you can refer it to the Financial Ombudsman Service (FOS). Many claims that are initially rejected go on to be upheld by the FOS, although this can take longer.

Will I have to pay to make a PCP claim upfront?

No, we operate on a "no-win, no-fee" basis. If your claim is unsuccessful, you will not pay any fees. In the event of success, we will charge a success fee of up to 25% + VAT of your compensation.