Money and Me Solicitors

Why is Car Finance and the way it has been mis-sold in the news!

Since 2019, the Financial Conduct Authority (FCA) has been investigating the way in which car finance was sold to customers in order to reach a view on whether there has been any wrongdoing which may have resulted in financial loss being caused to consumers.

One area of particular concern to the FCA was a discovery as part of their investigation, of arrangements between Brokers and Lenders which has been referred to as “Discretionary Commission Arrangements” whereby the Broker’s received commission based upon the interest rate being charged to the consumer. The risk this presented to consumers was that there was risk of consumer harm and loss when a Broker was being incentivised to broker a higher interest charge on the car finance agreement so as to earn higher commission.   

In 2021, the FCA took the very serious step of banning such Discretionary Commission Arrangements in order to remove the incentive Brokers involved in such arrangements had, in increasing the interest rate so as to earn higher commission.

Claims started to be made against Lenders and Brokers of car finance for redress and compensation as a result of their conduct and this has culminated in decisions being made both in court and via the Financial Ombudsman Service in favour of the consumers.

Don’t hesitate, find out now if you may be eligible to claim……….

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The FCA are currently considering what steps they will take against Brokers and Lenders. They are expected to report further in September 2024 but in the meantime, we believe that it is important for consumers to take steps now so that you minimise the risk of any claim being what is known as “time barred”.

PCP Finance FAQs

We can look at making claims for you on Personal Contract Purchase (PCP) Agreements or Hire Purchase (HP) Agreements where we can show they are consumer loans.

 

We are developing our legal view on claims in respect of Consumer Hire Agreements and Lease Agreements and will be updating this page as our view matures.

 

We cannot make a Car Finance claim for you where you have taken out a personal loan from say a Bank to separately purchase a car and then paid the Bank monthly payments.

We believe that claims could potentially be made in respect of Car Finance Agreements going back to 2007. We will assess each of your potential claims and make claims where we believe there are prospects of recovering compensation for you.

No, not necessarily. There are number of additional potential failings in the sale of Car Finance which may on their own or in combination mean that a claim can be made against the Broker and/or the Lender of your Car Finance. These include:

  • Failure to disclose commissions being earned as a result of the Car Finance Agreement you entered into.
  • Failure to carry out adequate affordability checks before you entered into the Car Finance Agreement.
  • Failure to provide you with all the options for purchase of the vehicle, so that you could make an informed decision.
  • Other failings by the Broker and/or Lender to comply with their legal and regulatory obligations under legislation such as the Consumer Credit Act 1974 as amended and the FCA Handbook principles, rules and associated guidance.

We can look at making claims for you where you have had PCP or HP on any new or used motor vehicle including cars, vans and motor bikes.

No. We can look at both current and completed Car Finance Agreements. Some consumers may have a number of claims that can be made.

This will depend upon the individual claim and what failings we can establish have occurred as a result of the conduct of the Broker and/or the Lender. Some relevant factors will be the size of the loan, how long the Agreement was for, and how much interest you paid.

For example, if we establish that you were not told about a Discretionary Commission Arrangement between the Lender and Broker and this is found to be unfair, the court or the Financial Ombudsman may at the very least order the Lender or Broker to pay as compensation some or all of commission the Broker earned or has been paid by the Lender as a result. On top of that, we would claim statutory interest. We believe, based upon our current research, that a claim just relating to Discretionary Commission Arrangement is likely to result in compensation which will range between £1,500.00 and £3000.00 per Agreement depending upon the financial factors involved as explained above and the secret arrangements that existed between the Broker and Lender.

Claims where we can establish other failings could result in further compensation and potentially even a right to “rescind” the Agreement. There are technical arguments to the making of these claims and how rescission would work. This and other legal arguments will be considered with you on a case by case basis. 

No, you can make any claim yourself directly to the court or the Financial Ombudsman.

Our standard fee arrangement is that there are no upfront fees. Provided you allow us to take your claim to a conclusion, we will only charge you a percentage of the compensation we recover for you on each Agreement plus any VAT payable.    

Example:

We make claims on 3 separate Car Finance Agreements for you and this results in compensation of:

Agreement 1 – compensation of £1500.00 including statutory interest.

Agreement 2 – compensation of £2700.00 including statutory interest.

Agreement 3 – compensation of £1350.00 including statutory interest.

If we agree to charge you 25% plus VAT, we would be paid £1387.50 plus VAT of £277.50 totalling £1665.00. You would receive the balance of £3885.00

 

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