The chief executive of the FCA, Nikhil Rathi has said: “There’s nothing stopping lenders moving tomorrow now they’ve seen the rules.”
This follows the latest announcement of the FCA redress scheme for PCP car finance that was announced in late March. The scheme is designed to help motorists reclaim mis-sold PCP finance that was purchased during April 2007 and November 2024 that may have included hidden commissions.
The scheme mentions that the average compensation is now around £829 per motorist and may include up to 12 million PCP car finance agreements. Rathi continued to say that some claims could be issued immediately, there is no reason why they can’t, but realistically most motorists will get refunded later this year or next.
PCP finance is the most common way to purchase a vehicle in the UK and is used by around 90% of motorists to get on the road. However, over the course of 17 years, several car dealers were found to be including a “discretionary commission arrangement” (DCA) – a now-banned type of finance which allowed the dealer or broker to adjust or increase the interest rate the customer would pay to get a higher commission.
The result is that now motorists are able to claim this money back from the finance company that issued it, including Audi Finance, Blackhorse and Motonovo.
Claims companies are hot on the bandwagon, looking to help broker compensation for drivers, typically charging 10% to 30% commission. Using a claims company or solicitor can be an effective way to streamline the process, helping you to get all your documents gathered and in the best position for getting your refund.
Whilst some households are complaining about receiving unsolicited text messages, emails and cold calls, it is always important to check the credentials of the claims company you use, with legitimate intermediaries holding FCA licenses to do so, such as Claims Smart.
You also have the option to make the claim yourself, without the use of brokers, as recommended by Martin Lewis of MoneySavingExpert – who lists set instructions on how to do this. With no commission, you could keep the entire compensation payout for yourself.
Martin Lewis told The Guardian that the sooner you submit your claim, the faster and more likely it could get paid out. This is understanding that most finance companies will want to deal with claims quickly and historically, finance firms that have had to payout claims typically cannot afford them at the end and tend to go out of business or offer tiny percentages.