How do I know if I was mis-sold car finance?

If you were mis-sold car finance, there may be a discretionary commission arrangement involved in your contract. You can find this out by reviewing your paperwork, contacting your lender directly or reaching out to where you got your car from. 

If you bought a car on Personal Contract Purchase (PCP) or Hire Purchase (HP) finance between 2007 and 2024, there is a chance you paid more than you should have. 

While you don’t need a claims management company such as Claim-Smart Limited to help you find out whether you’re eligible and pursue a claim, knowing how to go about the process to achieve a successful outcome can be confusing. 

That’s where our knowledge and expertise can take the worry out of your hands.

Our specialist team navigates the entire process for you, offering personalised support every step of the way.

Plus, as we offer a no-win, no-fee basis, we do everything we can to ensure a positive outcome for you. If we’re not successful, we don’t charge you a penny!

Find out more about our approach here.

What is mis-sold car finance?

Mis-sold car finance is when you were charged a higher interest rate than you should have been, when you bought a car on a Personal Contract Purchase (PCP) or Hire Purchase (HP) finance agreement. This would have been due to a Discretionary Commission Arrangement being included in the agreement.

Essentially, car dealers or credit brokers used to be able to set an interest rate that was higher than what the lender provided, and pocket the difference.

The finance agreement is considered mis-sold when the buyer was not made aware of the commission agreement and so had no idea about the higher rate or contractual terms.

While DCAs were banned in January 2021, an investigation was launched in January 2024 which has revealed up to 44% of cases may have been affected before this date.

The FCA has cracked down on the misrepresentation of these agreements by setting up a new compensation scheme for those affected which is due to launch very soon.

It’s important to note that the scheme covers PCP and HP agreements and doesn’t apply to Personal Contract Hires (PCH), a leasing alternative.

How do I find out if I’m owed money?

Checking your paperwork, reaching out to your lender, or contacting a CMC company, such as Claim-Smart Limited, to assess your eligibility and make a claim will help you find out if you’re owed money. 

Here’s a breakdown of your options:

Review your paperwork

If you have been affected, your original finance paperwork will mention a discretionary commission arrangement (DCA) or lay out an alternative commission arrangement. 

If you don’t have the paperwork to hand, you can check your credit report to identify the lender.

Contact your lender

As the lender will have paid the broker on your behalf, they will know whether the dealer received any additional money for your agreement. 

There has been direction from the FCA for lenders to contact those who are eligible but, at Claim-Smart Limited, we encourage anyone who thinks they could be affected to be proactive about making a claim as otherwise they could be waiting a long time.

Ask a CMC company

Claims management companies, such as Claim-Smart Limited, assess eligibility and manage claims from start to finish. Although our help is not essential to make a claim, our specialised teams know how to navigate the intricate landscape of mis-sold car finance agreements.

We provide personalised support, only charge a percentage of compensation, in line with the Fee Cap rules and regulations of the FCA, and operate on a no-win no-fee basis. So, you only pay if your claim is successful.

Start your claim today to find out more.

What’s the average payout for mis-sold car finance?

Those affected could receive on average £829 per agreement. If you had multiple agreements, you may be owed compensation on more than one of your agreements.

This figure has varied since the scheme was first announced, dropping down from £1100. The FCA has predicted that with around 12.1 million agreements affected, the total payout will sit around £7.5 billion. 

Do I need help to claim for mis-sold finance?

In short, no. You can do it yourself for free, but using an expert, no-win no-fee service such as Claim-Smart Limited can help take the stress of navigating an unknown process off your hands. 

If you believe you were affected, Claim-Smart Limited is here to help. Our services can help you if you have multiple agreements, are struggling to find your paperwork, or simply don’t have the time or understanding to navigate the complex process alone.

We do this by:

• Investigating your eligibility

• Identifying your lender

• Obtaining relevant records

• Drafting a formal complaint

• Potentially advising you on how to escalate to the Financial Ombudsman Service if there is a dispute

Plus, with our no win, no fee policy, you only pay if your claim is successful.

Think you may be affected? Make your claim today.