Did you finance your car with a Personal Contract Purchase (PCP) agreement between 6 April 2007 and 1 November 2024? Then you may be entitled to compensation.
Over the past two decades, car finance has been one of the most popular ways for consumers to purchase vehicles. However, many PCP agreements may have been mis-sold – because they included a discretionary commission arrangement, had unfairly high commission, or involved a contractual tie that you weren’t told about. Around 14 million agreements are thought to be affected, and the FCA is currently consulting on a compensation scheme.
Read on to discover:
- What PCP car finance means for you and how to claim compensation
- The Financial Conduct Authority’s (FCA) consultation and timelines on PCP redress
- The pros and cons of using a specialist law firm to investigate a potential complaint and pursue compensation on your behalf
Your rights as a consumer and how to claim PCP car finance compensation
If you financed your car with a PCP agreement, you have clear rights as a consumer, even if the agreement ended some time ago.
The starting point is understanding whether your PCP agreement included discretionary or undisclosed commission – and whether you were given enough information to make an informed decision at the time. In simple terms, a car finance contract might be considered unfair if information was missing or unclear, or if costs, risks and incentives weren’t clearly explained.
You don’t need to prove that anyone acted deliberately unfairly. Instead, the legal test focuses on whether the relationship between you and the lender was fair under consumer credit law.
To make a claim, one option is to raise a complaint directly with the lender. This involves providing basic details of the agreement and explaining why you believe it was unfair. You don’t need to use formal legal language – just focus on what happened and what you understood at the time.
The lender is required to investigate and respond within a set timeframe. If you’re unhappy with the outcome (or if they don’t respond in time), you may be able to escalate the matter to the Financial Ombudsman Service.
The FCA motor finance compensation scheme – and what this means for you
The FCA looked at more than 32 million car finance agreements and found that many customers weren’t told how dealers and brokers were paid – and that sometimes brokers could earn more commission by increasing the interest rate. In August 2025, the Supreme Court ruled that a lender acted unfairly where there was a high, undisclosed commission and a close tie with a broker that wasn’t clear.
This decision provided a clear legal framework. And since October 2025, the FCA has been consulting on a compensation scheme for car finance consumers treated unfairly between 2007 and 2024. The FCA has also published guidance on how PCP complaints should be handled, which includes the timelines lenders should follow when assessing complaints. Typically, lenders must provide a final response within 8 weeks. However, the FCA has imposed a temporary pause, which is due to be lifted on 31 May 2026.
The FCA’s position reinforces the principle that consumers should be treated fairly. Lenders are expected to assess complaints on their individual merits, including how commission arrangements operated and what information was provided at the point of sale. Of course, this doesn’t mean that compensation will be payable in every case, but it does mean that complaints must be considered transparently.
While the process can still feel unfamiliar or daunting, the FCA’s guidance and the wider regulatory landscape are designed to ensure your complaint is taken seriously and assessed fairly, based on the evidence available.
Thinking of using a law firm to pursue your complaint? We weigh up the pros and cons.
Some consumers choose to pursue a PCP complaint themselves, while others prefer support from a law firm. Both approaches are valid. As explained above, you don’t need a solicitor to pursue your claim. However, the right choice for you depends on your individual circumstances. Some factors to consider:
- Specialist expertise – Solicitors who regularly deal with PCP-related complaints understand the relevant legal tests, regulatory background and common issues raised by lenders. As a result, they provide reassurance during what’s often a time-consuming and unfamiliar process.
- Regular updates – A law firm manages correspondence, communicating with the lender on your behalf and keeping you up to speed at all times. This takes the pressure off you.
- Costs and fees – Many law firms (including HSL) work on a no-win no-fee basis and have fixed costs for successful cases. This means you know exactly what you’ll pay from the outset – and if your claim isn’t successful, you’ll owe nothing at all. Of course, in successful cases, this will have an impact on the final amount you receive.
- Personal involvement – Some consumers prefer to deal directly with their lender and remain closely involved at every stage of the complaint.
Ultimately, the decision is about what feels right for you. For some straightforward cases, making a complaint directly might feel manageable. For others, professional support provides clarity and peace of mind. Whichever route you choose, what matters most is that you understand your rights and feel supported in pursuing a fair outcome.
Interested in finding out more or checking whether you have a claim?
Our mis-sold car finance page has further details about who’s eligible, the complaints process and what to expect at every stage.
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