PCP/HP - Hidden figures?

On 11 January 2024, the Financial Conduct Authority (FCA) launched a major investigation into the multi-million-pound finance market. There have been a large number of complaints into 100’s of lenders allowing brokers (car dealerships etc) to inflate the interest rates on personal car finance agreements, enabling brokers to receive larger commissions. This was known as Discretionary Commission Arrangements (DCA’s) until the FCA banned them in 2021.

However, the worst part is that consumers were not aware of these arrangements. It has been estimated that around 40% of the agreements taken out roughly between April 2007 and January 2021 had this hidden DCA.

While the FCA conducts its investigation, it has paused complaints made after 17 November 2023 and will continue to pause complaints up until the scheduled deadline of 25 September 2024. However, this doesn’t mean you can’t make an enquiry into your agreement now to see if you had this DCA, and if so, make a complaint. This pause essentially delays the finance companies 8-week response time while information is gathered and investigated.

The answer to this is… maybe, depending on who your finance lender was and whether a DCA was on your agreement.

There are checklists and tools available online so you can check to see if it’s worth making an enquiry into your current or pre-existing finance agreement. This means you can make the enquiry yourself, without going to third party claim management companies who would take a percentage of any successful claim.

To summarise the points, DCAs could have been applied to:

• Vehicles bought on finance, used primarily for personal use, regardless of whether the agreement is ongoing or paid off in full (Business agreements could be included but use needs to still be primarily personal).
  
• After April 2007 but before 28 January 2021.
• On Hire Purchase (HP) or Personal Contract Purchase (PCP) (This does not include personal contract hire).

There is no guarantee that anyone is due compensation because of this. There is always a small possibility that the FCA could finish its investigation and rule in the end that no further action is to be taken but it might be worth reviewing existing or historic agreements that you have taken out and find out if it was a DCA contract. You will then be in a good position to claim, if the FCA rule that compensation should be paid.