The Financial Ombudsman Service (FOS) is an independent body that resolves disputes between consumers and financial businesses. It handles complaints about banks, insurance, credit agreements, and vehicle finance, including Personal Contract Purchase (PCP). If your lender rejects your complaint, the FOS can step in to assess your case.
Why Are PCP Complaints Rising?
PCP finance has been the most popular way to buy cars in the UK, but complaints are increasing. Many consumers claim they were mis-sold agreements, overcharged interest, or not given full details about commissions. The Financial Conduct Authority (FCA) launched an investigation into hidden commissions, leading to a surge in claims.
What Are the Common PCP Complaints?
- Hidden Commission Fees – Some lenders paid dealers commissions that increased interest rates without customer knowledge.
- Unclear Terms and Conditions – Many customers weren’t fully informed about balloon payments, early termination, or mileage limits.
- Affordability Checks – Lenders must assess whether customers can afford repayments, but some failed to do so properly.
Can You Claim Compensation for Mis-Sold PCP?
If your PCP agreement was mis-sold, you might be entitled to compensation. The FCA found that many agreements involved undisclosed commissions, which could have led to higher costs. If a lender didn’t follow proper procedures, the FOS can review your case and potentially order a refund.
How to File a Complaint Against Your PCP Lender
- Raise a Complaint with the Lender – Contact the finance company and explain why you believe your agreement was mis-sold.
- Wait for a Response – Lenders have up to eight weeks to reply with their final decision.
- Take It to the Financial Ombudsman – If you’re unhappy with the lender’s response, escalate the case to the FOS.
What Happens When You Take a Case to the Financial Ombudsman?
The FOS will review your complaint, ask for evidence, and consider whether the finance company acted unfairly. Decisions are based on FCA regulations, contract fairness, and affordability assessments. If the ombudsman rules in your favour, the lender may have to refund interest, remove charges, or compensate you for financial loss.
How Long Does It Take to Get a Decision?
The FOS aims to resolve simple cases within three months, but complex cases can take longer. With thousands of PCP complaints being processed, delays are common. If you have clear evidence of mis-selling, your chances of a quick resolution increase.
Recent Data on PCP Complaints & Refunds
- PCP Complaints Increased by 50% in 2023 – The FOS received thousands of complaints about car finance mis-selling. ([Source: FOS Annual Report])
- Hidden Commissions Impact 560,000 Agreements – The FCA’s investigation found that undisclosed commissions inflated costs for customers. ([Source: FCA Report])
- Successful Claims Lead to Millions in Refunds – The FOS has ruled in favour of consumers in many cases, forcing lenders to pay back interest. ([Source: Financial Ombudsman Data])
Martin Lewis on Mis-Sold Car Finance
Consumer finance expert Martin Lewis has highlighted the growing issue of mis-sold car finance, urging consumers to check their agreements. Many drivers unknowingly paid higher interest rates due to hidden commissions, making them eligible for compensation. If you believe you were mis-sold PCP finance, following his advice and filing a complaint could help recover costs.
Should You Use a Claims Management Company (CMC)?
Some companies offer to handle your PCP complaint for a fee, but you can do it yourself for free. The FOS process is straightforward, and there’s no need to pay a percentage of your refund to a CMC. If you’re unsure, free consumer advice services can guide you through the complaint process.
Final Thoughts
If you suspect your PCP finance was mis-sold, don’t wait to take action. Start by contacting your lender, gather your documents, and escalate to the FOS if necessary. With thousands of successful claims already processed, you could be owed money if your agreement was unfair.