If you took out a Personal Contract Purchase (PCP) agreement in the UK, you may be entitled to a claim if the dealer earned undisclosed commission on your finance. Many PCP agreements included hidden dealer commissions, which could increase your interest rate without your knowledge.
This page explains:
- What a PCP finance commission is
- How commission was applied and why it can be unfair
- Eligibility for a commission-related PCP claim
- How to make a PCP finance commission claim
- Typical outcomes and compensation
- FAQs about PCP commission claims
What is PCP Finance Commission?
PCP finance commission is a fee that a dealer may receive from the lender for arranging a finance agreement. While some commission is standard, issues arise when:
- The commission is not disclosed to the customer
- Interest rates are increased to generate higher commission
- Customers are unaware that they could have obtained a better deal
These practices were common in PCP agreements prior to 2021 and have been investigated by the Financial Conduct Authority (FCA).
How PCP Commission Can Lead to Mis-Selling
When commission was undisclosed, it often resulted in:
- Higher interest rates than necessary
- Customers paying more than they should over the term of the PCP
- Lack of transparency about the true cost of the finance
- Customers not being offered alternative deals
Discretionary commission arrangements allowed dealers to adjust interest rates to increase their commission, which was frequently not explained to the customer. This is considered a form of mis-selling.
Who Can Make a PCP Finance Commission Claim?
You may be eligible if:
- You entered into a PCP agreement in the UK before 2021
- The dealer received commission that was not disclosed
- The interest rate or fees were higher than necessary
- You were not informed about your options or alternative finance deals
PCP commission claims can involve lenders such as:
- Black Horse Finance
- Santander Consumer Finance
- Close Brothers Motor Finance
- MotoNovo Finance
- Barclays Partner Finance
Other lenders may also be involved depending on the specific finance agreement.
How to Check if You Have a PCP Commission Claim
Start by reviewing your PCP agreement. Look for:
- Interest rate details and variations
- Evidence of dealer commission or hidden fees
- Lender name and contact information
- Agreement start and end dates
Even if your PCP agreement is already paid off or the car has been sold, you may still have a valid claim if commission was applied unfairly.
How to Make a PCP Finance Commission Claim
1. Submit a Complaint to the Lender
Send a formal complaint to your lender outlining:
- Why you believe the PCP was mis-sold due to commission
- Supporting documents, such as your PCP agreement and payment history
- The impact of the undisclosed commission on your finance
Lenders are required to respond, usually within 8 weeks.
2. Escalate to the Financial Ombudsman Service
If your complaint is rejected or not fully resolved, you can escalate to the Financial Ombudsman Service (FOS). Include all supporting documents and correspondence. The FOS can award compensation if it finds your claim valid.
3. Consider Professional Assistance
Claims management companies or solicitors can handle complex PCP commission claims. They typically charge a percentage of the compensation only if the claim succeeds.
Potential Compensation for PCP Commission Claims
Compensation can include:
- Refund of excess interest paid due to undisclosed commission
- Repayment of hidden commission fees
- Additional interest on the refund
Compensation varies depending on the finance agreement and the amount of commission applied, but claims can result in hundreds or thousands of pounds.
Tips for a Successful PCP Commission Claim
- Provide clear evidence of undisclosed commission or inflated interest
- Keep copies of all finance agreements, statements, and correspondence
- Submit complaints in writing and follow up promptly
- Escalate to the Financial Ombudsman Service if the lender does not resolve the claim
- Consider professional advice for complex cases
Common Questions About PCP Commission Claims
Can I claim if the PCP agreement is finished?
Yes. Claims are possible even after the PCP agreement has ended.
Does selling the car affect my claim?
No. Compensation is based on the terms of the finance agreement, not the ownership of the vehicle.
Do I need a solicitor?
No. You can submit a claim directly to the lender or the Financial Ombudsman Service, although some people use professionals for guidance and ease.
Is there a time limit for making a claim?
While most claims are eligible, deadlines may be introduced following FCA investigations, so starting early is advised.
Next Steps
1. Review your PCP agreement and look for undisclosed commission.
2. Submit a formal complaint to your lender detailing why you believe the agreement was mis-sold.
3. Escalate to the Financial Ombudsman Service if necessary.
4. Consider using a claims specialist for complex cases or multiple agreements.
Understanding how commission was applied to your PCP agreement is crucial. Even if your PCP agreement has ended, you may still be entitled to compensation.
Act early to protect your rights and maximize your potential refund.