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BMW PCP Claims

Did you have a BMW car finance agreement before January 28th 2021? If so, you may be able to claim compensation in light of a new FCA announcement concerning hidden commissions.

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A background on BMW

Headquartered in Munich, Germany the BMW brand is synonymous with luxury and high speed motors around the world. According to the brand’s PressClub local site, BMW has had some notable achievements, milestones and statistics so far this year, including:

Completion of new halls for future e-drive production at the BMW Group site in Steyr for next gen electric drives
The launch of the new BMW 5 Series Touring with an optional entirely electric model
BMW Motorrad crowns its 100th anniversary with the strongest sales result in the company’s history

Another record sales volume in the financial year 2023. 14,3 percent increase compared to the previous year
All-electric BMW i4 M50 once again best-selling model and the BMW M3 Sedan most successful high-performance sports car worldwide of the brand

What are BMW PCP claims?

Three years ago in January 2021, the Financial Conduct Authority, otherwise known as the FCA, prohibited ‘discretionary commission arrangements’ (DCAs) within financial agreements. This move prevented lenders from continuing to incentivize brokers to increase client interest rates on car finance so that they’d obtain more commission. Fast forward to January 2024 and the FCA launched an investigation into this exact matter. It is worth noting that to announce such a large-scale investigation, they probably already have significant evidence of this form of misseling.

According to the FCA, the decision to conduct this investigation is a direct response to customer complaints concerning motor finance firms potentially unfairly rejecting otherwise legitimate miss-selling claims. Such complaints from clients are based on the belief that their contract was more costly due to their dealer/broker earning a significant secret commission from their policy.

Who has a BMW PCP claim?

Right now there are potentially millions of car finance customers who are wondering whether or not they will be eligible for compensation as a result of their hire purchase or PCP agreement(s). With this in mind, the car finance must have been sold before January 28th 2021. You will be able to still claim if the car has now been paid off and the former agreement is essentially over. For customers who have already had a diesel emissions claim, there is no reason that this would subsequently exclude a further hidden commission claim.

A personal contract hire agreement complaint in which the car was leased will not be included. If you do not fit the hidden commission criteria, you could still have a car finance unaffordability claim if you can provide evidence that necessary background checks were not carried out by the lender or dealership who offered you the loan.

How to claim BMW PCP compensation

For the next eight months, firms have been asked by the FCA to stop responding to complaints. The current pause is set to last until September 2024, but there is a chance this deadline could be pushed further back. Whilst the investigation is being conducted, it is certainly worth submitting any complaints to the firm you paid your finance fees to as soon as you can as there is often a limitation period to be observed. With regards to misselling, you are generally required to make your complaint to your provider within six years of the issue, or within three years of you becoming aware of the problem.

We can help you get kickstart your complaint in order to see if you may be eligible for a payout, click here to get going.

BMW Secret Hidden Commisions

It has been unveiled that lenders tend to conceal the existence of commission offered to their brokers. A mystery shopping exercise carried out back in 2018 reviewed the processes followed by 122 retailers in their provision of Motor Finance. Of those 122 retailers, only 11 chose to disclose to the customer that commission may be received by the broker for arranging the finance. This violates CONC requirements as it creates an unfair relationship between customer and lender.

BMW Difference In Commisions

It has been found that lenders often incentivise a broker to charge a higher interest by compensating them with a commission proportional to the interest the sell. The estimated cost of this behaviour for the customers is £300m annually. An FCA consultation entitled : ‘Motor Finance discretionary commission models and consumer credit commission disclosure,’ found that Difference in Charge models are the most damaging to the customer which unnervingly consist of 95% of the 1000 agreements the FCA looked into.

BMW Inadequately Explained Contracts

The mystery shopper exercise mentioned earlier which was carried out by the FCA also wanted to investigate whether or not lenders fully disclosed all the necessary information regarding the Motor Finance agreements to be made. The shoppers found that the concept of ownership of a car under PCP was frequently brushed over or poorly explained. 69% of the mystery shoppers were not made aware by the broker that they would not fully own the vehicle until they had payed the final ‘balloon payment.’

How much is a BMW claim worth?

Nobody knows how much a PCP claim will be worth to customers at the moment. To determine the appropriate redress fee, the FCA will need to complete their investigation and assess the significance and sale of the misselling before making this decision. To date, the FCA has simply stated that it will “identify how best to make sure people who are owed compensation receive an appropriate settlement in an orderly, consistent and efficient way”.

Examples Of PCP Misselling

A list of real-life scenarios to demonstrate how you may have

been mis-sold a car on finance:

PCP wasn't the best option

A PCP car on a finance deal was not the best option; it would have worked out 40% cheaper if the customer had used a hire purchase agreement.
The customer felt that they were pushed into making the wrong decision without complete understanding.

Ownership was unclear

The salesperson did not make it clear who would own the vehicle, whether it be the customer, the finance company, or the car dealership.
PCP interest was overcharged.
The customer did not receive alternative options from the dealership.

Hidden Commisions

The salesperson did not fully explain they would receive a commission on the sale of the car.
The customer was mis sold their mileage estimation; the mileage was estimated at 9,000 per year when the dealer knew the customer exceeded this substantially.

Responsibility for repairs

The customer was not advised who would be responsible for repairs.
The vehicle broke down 6 months into the PCP finance agreement.
The car dealership would not pay for any repairs and left the customer with a large bill.

Insufficient background checks

PCP payments were unrealistic, no finance credit checks were carried out.
The customer was rushed into the finance agreement and assured payments would be affordable.
The salesperson skipped through the car finance agreement (t&c).

Pressure from dealership

The car dealership did not explain the interest properly to the customer.
Mileage was over charged mileage by 5,000 miles.
Customer was not provided with a range of options and felt pressured to take a PCP agreement.
PCP interest was overcharged.

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If you'd like to get your compensation claim in before the FCA investigation is concluded to have it lodged in advance you can do so now