What percentage of car finance claims are approved?

There’s no exact figure for what percentage of car finance claims are approved. 

While the FCA believes around 12 million agreements made between 2007 and 2024 are expected to be eligible for compensation as part of their redress scheme, approvals are entirely based on claims meeting their specific criteria.

Customers whose claims are successful will receive an average payout of £829 per agreement. 

This amount will be based on the specific details of their agreement such as the rate of inflated interest and the length of the agreement.

If your PCP car finance claim isn’t approved, it doesn’t always mean your claim isn’t valid or you aren’t entitled to compensation. 

There are formal ways you can challenge the decision if you believe your claim should’ve been approved.

If you think you’re entitled to compensation and could benefit from professional guidance to make your claim, Claim-Smart can help.

Reach out to us and start your claim today.

How likely are you to be approved for car finance compensation?

It depends on what type of arrangement you had and when. 

However, ultimately, if your agreement contained a DCA, high commission structure or a tied arrangement, you’re likely to be eligible.

Here’s a reminder of the eligibility criteria:

• Motor finance agreements taken out between 6th April 2007 and 1st November 2024.

• Agreements contained at least one of the following three arrangements:

• A discretionary commission arrangement (DCA): this allowed the broker or dealer to set the interest rate in order to receive a higher commission.

• A high commission arrangement: at least 39% of the total cost of credit and 10% of the loan

• A contractual tie: where the customer was only provided with one lending option that was masked as the ‘best on the market’. When in fact the broker or dealer had an exclusive link with the lender.

Why would a PCP car finance claim be denied?

According to the formal FCA redress scheme, a PCP car finance claim could be denied for the following reasons:

• Customers have already accepted redress on their agreement, had their claim determined by a court, or successfully complained to the Financial Ombudsman.

• If the lender can prove not informing the customer was a fair decision.

• If a loan is deemed ‘high value’ it won’t be accepted into the official FCA redress scheme but you can still complain to the lender or Financial Ombudsman.

• If the agreement was zero-interest.

• If the commission was below a certain threshold. For agreements before April 2014, the threshold is £120. It is £150 for agreements after this date.

It’s important to note that lenders may mistakenly not approve eligible claims. The FCA has set up a supervisory team to oversee how the process is handled to make sure the risk of wrongful denials is lower.

What should I do if my PCP finance claim isn’t approved?

If your PCP finance claim isn’t approved and it is an initial decision that can be appealed, you can resubmit your claim. 

Alternatively, if it is an official final decision under the redress scheme rules, the next step is to escalate to the Financial Ombudsman Service (FOS) and you should take the following steps:

1. Read the response letter. The lender will have explained their reasoning so you can work out whether their decision is correct or not.

2. Escalate your case to the Financial Ombudsman Service (FOS). The FOS is a free, independent body that resolves disputes between customers and financial firms. Under the redress scheme, you have six months from January 2027 to appeal and escalate to the FOS.

3. Prepare supporting evidence. If the rejection is a result of missing paperwork or other information, tracking down the details will help to prove your case.

4. Use a court claim as a final resort. If the redress scheme doesn’t meet your expectations, you can take your claim to court. It’s more costly and slower, but is a process available to you.

Can I resubmit a mis-sold PCP car finance claim if mine isn’t approved?

You may be able to resubmit your claim, but it depends on the rejection reason.

 It’s also important to distinguish between a final response under the redress scheme, or if resubmission is possible. 

If you disagree with an initial response, you can appeal.

If the lenders final redress determination denies you any compensation, and you still believe you’re eligible, you will need to escalate it to the Financial Ombudsman (FOS) or take it to court.

Let’s walk through what you can do based on why your PCP car finance claim isn’t approved.

Incomplete documentation

This could include when a lender might not be able to find you or your agreement and additional identification is required. 

Or it could be when you’ve changed your address or your name and it doesn’t match up with the old documentation.

What to do: Locate all required documentation and resubmit with all of the relevant information. If you’ve received a formal final response, you can escalate to the Financial Ombudsman (FOS).

The lender claims commission was disclosed

The FCA redress scheme is very particular around how prominently commission was disclosed in each agreement. In short, the customer must have been able to clearly understand the commission structure present in their agreement for it to be considered fair. Getting familiar with how this applies to your agreement will be useful in case your claim is denied.

What to do: Work out whether your agreement falls under this type of exemption as in some cases it will mean you’re not eligible for compensation. If you still believe you are, and this isn’t a final response, you can appeal to the lender. If it is a formal final response, you should escalate to the Financial Ombudsman (FOS).

The lender believes your agreement is excluded

There are certain exemptions to the redress scheme including high commission structures or different types of agreements E.g. Personal Contract Hire agreements aren’t covered. 

What to do: Double check your agreement was taken out within the qualifying window - between 2007 and 2024 - and that it meets all the eligibility criteria. If you believe you’re eligible, and it’s not a formal final response, you can appeal the decision. Otherwise, you can take it to the Financial Ombudsman (FOS) to resolve.

Do I need a claims management company to have my PCP claim approved?

No, you can submit your PCP car finance claim independently, without the support of a claims management company (CMC). 

The FCA highlights this and has aimed to make the redress scheme as simple as possible so customers are able to navigate it by themselves.

There are, however, various scenarios and factors that can introduce complexity when claiming for mis-sold car finance; misunderstood lender exclusions, disputes requiring escalation, or multiple agreements involving lenders that are no longer active can all put obstacles in the way.

That’s where a claims management company such as Claim-Smart can help.

Our professional familiarity with the process and expert helping hand can guide you through your claim from start to finish, so you don’t have to navigate it alone. 

For more information and to start your claim, get in touch today.