The Car Finance Scandal Explained Were You Overcharged?
The Car Finance Scandal Explained: Were You Overcharged?
Introduction:
If you used a finance deal to buy a car, van, or motorbike before January 2021, you might be one of millions of UK drivers who were unfairly overcharged. A widespread industry practice involving hidden commissions has been brought to light, and it could mean you are owed significant compensation.
At PCPclaimDirect, we believe in making things clear and simple. This guide explains the car finance scandal, how it likely affected you, and the straightforward steps you can take to reclaim your money.
What Was the Problem? Unpacking Discretionary Commission Arrangements (DCAs)
The main issue centres on something called a ‘Discretionary Commission Arrangement’ or DCA. This was a commission model, now banned by the Financial Conduct Authority (FCA), that gave car dealers the power—or 'discretion'—to set the interest rate on your finance agreement.
The critical flaw in this model was the incentive it created. The higher the interest rate the dealer set for you, the larger the commission they received from the finance lender. This created a direct conflict of interest, as the dealer was rewarded for making your finance more expensive rather than finding you the best available rate.
Beyond DCAs: The ‘Secret Commission’ Issue
The problem doesn't stop with DCAs. Landmark court rulings have confirmed a wider issue of ‘secret commissions’. The law states that it was unfair for a dealer to receive any commission from a lender without the customer’s fully informed consent.
This means that if you weren't clearly told about the commission—its existence, its nature, and the amount—your agreement may have been unfair. This could apply to a vast number of finance deals, even those without a DCA.
Could You Have a Claim? Key Signs:
You may have been mis-sold if you:
Bought a vehicle on a Personal Contract Purchase (PCP) or Hire Purchase (HP) agreement before 28 January 2021.
Were not explicitly told that the dealer would earn a commission for arranging your finance.
Felt that you weren't offered a fair range of options and were pushed towards a specific finance product.
The great news is you don’t need to have your original documents to start an investigation.
How PCPClaimDirect Simplifies Your Claim
While you are entitled to complain directly to the lender, the process can be complex and time-consuming. Understanding whether a settlement offer is fair requires expertise.
At PCPclaimDirect, we manage the entire journey for you on a No Win, No Fee basis.
We Investigate for You: We use our systems to locate your past finance agreements, removing the hassle of digging out old paperwork.
We Build Your Case: Our team submits a professionally drafted, formal complaint to the lender on your behalf.
We Fight for a Fair Outcome: We handle all the correspondence and will negotiate to ensure you receive the full compensation you are entitled to.
Ready to find out if you were overcharged? Our free, no-obligation check takes only a minute.
