Car Finance Claims

“Sufficient, adequate and timely information”

Car finance agreements can be complex. The FCA found that
in some cases important details were not explained to
consumers properly, at earliest point possible or at all.
If you bought a vehicle using a PCP within last 5 years
which you feel may not have been suitable for you or where
the broker's commission was not disclosed to you then call
us on 0161 518 5511.

Car Finance Claims

The Financial Conduct Authority (FCA) recently published its long-awaited
findings after a review of sales practices in the motor finance industry. The
results gave significant cause for concern regarding the way in which many
brokerages appeared to be taking advantage of consumers in the sale of
personal contract payments (PCPs). A PCP typically involves payment of lower
monthly payments for a set period (usually between 3 and 5 years) followed by
a final larger lump sum payment.

Commission payments

The FCA noted that in many cases the level of commission paid to the broker by
the lender for arranging the car finance was not disclosed to the consumer.
Indeed the very existence of a commission payment was often not made known
to the borrower. It is a requirement that any such commission payment should
be drawn to the purchaser’s attention if it is likely to have a material impact of
their decision to proceed.
Historically the interest rate charged by a car finance provider was determined
by the level of risk posed by the borrower – i.e. their creditworthiness. If a
client had a poor rating then it was likely that the interest rate would be
However, the FCA found a growing number of cases where the broker was given
discretion to change the level of interest. Where a higher level of interest was
charged a greater commission payment would be made to the broker by
the finance provider.
This practice both creates a risk that car finance lending will not function
properly and a conflict of interest for brokers – many consumers are highly likely
to have been charged higher rates of interest than could otherwise be justified
because the broker was able to obtain a higher commission payment as a result.
The consumer would be left out of pocket as the level of commission would
effectively be clawed back under the higher interest rate.

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Phillipson Hardwick Limited is a limited company, registered in England and Wales, under registration number 11626146, registered office Magnetic House, Waterfront Quay, Salford, England M50 3XW, with ICO Registration Number ZA527169 and is authorised and regulated by the Solicitors Regulation Authority under SRA 656089

Our Address

Magnetic House, Waterfront Quay
M50 3XW

Phone: 0161 518 5511

Email: [email protected]