Will PCP Be the New PPI?

A young couple receiving the keys to their newly leased car by a sales person
Author: Samuel Beckingham
Updated: Nov 01, 2023
4 minutes read

Topping the List of Complaints

Legal UK Services is a team of solicitors and they believe mis-sold PCP will be the new PPI scandal to rock the nation. Complaints to the Financial Ombudsman Service have reached an all time high over mis-sold personal contract purchase, commonly known as PCP. By 2024, Legal UK Services is expecting PCP complaints to be the most prolific.

Complaints about car finance deals to the ombudsman increased from 6,128 to 11,446 across the last financial year. As around 80–90% of car deals are secured using PCP, this represents a staggering trend. At this rate, they are expected to overtake current accounts, which is the most complained about service.

What is PCP?

With PCP, you pay a deposit and monthly instalments throughout the time you have the vehicle. It’s lent to you on the basis that you will keep up these payments and not breach any of the contract rules. When the deal comes to the end of its timescale, you can either pay an inflated price (balloon payment) to keep the vehicle as yours, return it to the dealer, or use its value against the deposit of another PCP deal.

How Have PCP Deals Been Mis-Sold?

There are several ways in which a PCP deal could have been mis-sold to a consumer. You may have received poor advice about the options available to you or been forced into a more expensive deal. Similarly, sales people get paid commission through these deals and often tried to hide high levels of it in these deals.

The bottom line is, there wasn’t enough transparency or the terms and conditions weren’t fully explained to you at the time of taking out the deal. Extra charges, such as exceeding the mileage limit, or explaining the ownership of the car may not have been conveyed properly.

How Big Could Mis-Sold PCP Be?

According to the Financial Ombudsman, PCP claims could reach £10 billion, but Legal UK Services believes this to be a conservative amount. As there is around £50 billion tied into car finance deals throughout the country, it would not be surprising if this figure were to climb higher in 2024.

PCP deals are not fully understood by the majority of consumers, which is extremely worrying. Almost 90% of people didn’t understand the terms and conditions of their deal, including whether they got a fair offer or felt satisfied. As most cars are bought using PCP deals, this could end up as a massive compensation issue later down the line. As such, people are slowly realising the issue and how they might be affected.

How Can I Claim Compensation?

Fortunately, there are ways in which you can receive compensation for a mis-sold PCP deal. As long as you’re eligible, you can make a claim. If we take it that the majority of consumers don’t understand PCP deals, you’re more than likely to qualify already.

You can be eligible to make a mis-sold PCP claim if the following applies:

  • Your PCP deal was within the last 10 years

  • Fees, interest rates and costs weren’t explained clearly

  • High levels of commission were not disclosed

  • Your payments were unaffordable, and your lender was aware of this

To start your PCP claim, click on the button below. It’s the quickest way to check your eligibility.