At the heart of the issue are discretionary commission arrangements (DCAs), where car dealers and brokers were incentivised to increase interest rates on finance deals to earn higher commissions. These practices often led to consumers paying more than necessary, without being informed about the commission structures involved.
The Financial Conduct Authority (FCA) banned DCAs in January 2021, but investigations have revealed that many agreements prior to this date may have been mis-sold. A landmark Court of Appeal ruling further expanded the scope, stating that any undisclosed commission could render a finance agreement unlawful.
Financial institutions have begun setting aside substantial sums in anticipation of compensation claims. For instance, Ford's British motor finance division has reserved £61 million to cover potential costs related to the scandal .
PCPClaims.co.uk, a specialist in mis-sold car finance claims, reports a surge in inquiries from consumers seeking redress. Their team assists clients in navigating the complex claims process, aiming to recover funds lost due to these unfair practices.
"Many consumers were unaware of the commission structures embedded in their finance agreements," a spokesperson from PCPClaims.co.uk stated. "Our goal is to ensure that affected individuals receive the compensation they deserve."
To determine eligibility, consumers should review their car finance agreements, particularly those initiated between April 2007 and January 2021. Key indicators of mis-selling include:
- Lack of transparency about commission payments to dealers or brokers.
- Inflated interest rates without a clear justification.
- Inadequate explanation of finance terms and conditions.
Consumers who believe they may have been mis-sold a PCP or HP finance agreement are being urged to gather documentation and review their contracts for any signs of hidden commissions. Independent claims specialists, such as those behind PCPClaims.co.uk, have reported a sharp increase in enquiries as public awareness of the issue grows.
For more information on PCP Claims, please visit PCPClaims.co.uk