Mis-sold Car Finance Claims

In January 2021, the Financial Conduct Authority (FCA) banned ‘discretionary commission arrangements’ (DCAs).

These were a secret part of commission models for vehicle financing, which ultimately meant the broker organising your financing could be paid a bonus commission fee according to the level of financing you agreed to, in many cases without you knowing.

The FCA ruled that this practice led to higher finance costs for affected consumers.

In 2024, due to recent decisions made by the Financial Ombudsman Service (FOS), the FCA began an industry wide investigation into what possible widespread misconduct regarding the use of DCAs.

However, the FCA has extended the deadline for lenders and brokers to respond to mis-sold car finance complaints. The new deadline is now after 4th December 2025, however you can still sign up now to ensure your claim can be reviewed in plenty of time.

If you purchased a car on a PCP or Hire Purchase agreement before January 2021, you may well be affected. This includes people who purchased cars, vans, and motorbikes for personal use. 

You may be eligible to claim if the person who sold you the vehicle didn’t inform you that they would receive commission, failed to inform you about all finance options available to you, or didn’t fully inform you about interest rates and the terms of the contract you were signing.

This does not just apply to new cars. Used vehicles purchased through PCP or Hire Purchase may also be eligible. Plus, the agreement doesn’t have to have ended. Claims for agreements that are still in place can be made, if eligible.

The Financial Ombudsman, which works closely with the FCA, took over motor finance complaints in April 2007, so it is likely that you will need to have taken out the agreement after this date to be eligible for a claim.

Hidden commission is when you are sold a vehicle on a PCP or Hire Purchase finance agreement, but you are either not told that the broker will be making commission, or they do not tell you the extent of the commission.

Many people purchasing a car before January 2021 were not made aware their broker could increase the commission paid to them by selling PCP and Hire Purchase agreements with increased interest rates.

Brokers should always be transparent about the amount of commission they are earning, to help ensure a transparent sale and reduce the risk of the broker offering finance products based on commission and not what’s best for their customer.

If you were sold a vehicle on a PCP or Hire Purchase agreement and the broker did not make their commission clear to you, this may be classed as hidden commission, and you may have a mis-sold car finance claim.

The payout will depend on your specific circumstances and how much you paid that you shouldn’t have done. However, many people may be due back thousands of pounds. So, if you believe you have been affected, it is worthwhile to investigate, which our expert solicitors can assist you with.

Personal contract purchases (PCP) are a very popular way of financing a car, also known as personal contract hire. You typically pay a deposit, and then a monthly fee for the car for a set number of years. At the end of the deal, you can usually hand the car back for no extra cost, pay a lump sum to enable you to keep the car, or put the value towards a different car with the same dealership.

Hire Purchase is another way to finance a car. You’ll typically pay a deposit, then pay a set payment each month until you have paid off the value of the car. The loan is secured against the car, so you don’t own it until you’ve made all of the payments.

The final decision on your claim will likely be linked to the FCA’s conclusion of their investigation into the industry, but it is important that you lodge your claim as soon as possible to join the queue. One of our expert solicitors will be able to assist you with this.

If you believe you have been mis-sold car finance, get in touch with Setfords. We will be able to talk through all of your options. If it is likely that you have a claim, we will be able to contact the finance provider for you and take all of the necessary steps to ensure you get back the money owed to you. Simply fill out our form below to get started.

We work on a ‘no win no fee’ basis, meaning that if you do not receive any compensation for car finance mis selling, you will not have to pay us. Our expert solicitors will manage the process of claiming back your lost funds from start to finish for a small percentage fee of your reimbursed costs. Contact us today and we can swiftly advise you on the next steps and start the process of getting the funds you are owed back to you.

In cases of this type, you will generally have six years to bring a claim from the date you became aware you were mis-sold car finance. This six-year period is known as the ‘Limitation Period’. This can be a complex area of law to navigate, and our solicitors first step will be to clarify if you have a claim within the limitation period.