Did you have a Volvo 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.
Claim NowVolvo is a Swedish brand, founded in Gothenburg in 1927 by Assar Gabrielsson and Gustaf Larsson.
Regarding brand identity, the Volvo name has long been associated with reliability and safety within the automotive market. Volvo has been at the forefront of safety innovations over several decades and has earned a reputation as one of, if not the ‘safest’ car manufacturer in the world.
In 2024, Volvo celebrated new models, milestones and achievements including the launch of the philanthropic Volvo For Life Fund, an all-time monthly sales record for March and the 2024 World Urban Car top spot.
Back in January 2024, The Financial Conduct Authority announced that they will be investigating historical PCP and HP agreements to determine whether hidden commission payments were secretly being earnt by brokers. The news made headlines due to the potential scale of such an investigation. For example, The FCA’s enquiry has the potential to allow millions of car finance customers to claim compensation from their lender/broker. The purpose of the investigation is to seek out whether or not discretionary commissions were made by brokers who were financially incentivised by brands to offer higher interest rates to customers.
The Financial Conduct Authority’s decision to investigate has followed a number of customer complaints concerning motor finance firms potentially unfairly rejecting otherwise legitimate mis-selling claims. Such complaints from customers are centred around the belief that their contract was more costly due to their dealer/broker earning a significant secret commission from their policy.
Volvo Cars set a new global sales record last year as the company reported full year sales of 708,716 cars. The brand offers customers both PCP and ‘Hire Purchase’ options to purchase their vehicles. For many years now a personal contract purchase has been the most popular way to finance and purchase a car. PCP agreements were introduced more than ten years ago after multiple financial crisis’ and have continued to increase in popularity over the years.
If you are wondering whether or not you may have a PCP claim against Volvo once the investigation has been conducted, there are a few key things to consider. Firstly, in keeping with the deadline that prohibited hidden commissions, complaints need to be made only for car finance agreements sold before the 28th of January 2021. In addition to preceding the deadline the car sale must have been a either a PCP or a hire purchase offering. Unlike a PCP agreement, a hire purchase agreement means the customer pays the value of the car in specific monthly instalments.
Customers will not be able to make a complaint If they bought a car on finance after the deadline or without PCP or Hire Purchase agreement. If you did purchase your car with the aid of car finance but it was on or after the 28th of January 2021 deadline, you will also not be eligible for compensation. Secondly, a personal contract hire agreement complaint in which the car was leased will not be included.
Initially, there was a pause put on firms by the FCA to stop companies from responding to clients during their investigation. This pause was set to stop in Sept 2024, however, the deadline has been pushed back to next year as the FCA would like longer to investigate. This pause period began after 17th November 2023 and will now end May 2025 whilst the FCA conducts their investigation. Whilst the investigation is underway, it is a good idea to submit any complaints to the firm 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.
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.
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.
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.’
Not even the FCA currently knows the amount of financial compensation that may be available to car finance customers in the future. In fact, 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”.
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
