image of a pile of pound coins

FCA tells PCP lenders to ensure they can cover mis-selling complaints

The Financial Conduct Authority (FCA) has written to firms that provide car finance to remind them they must maintain “adequate financial resources at all times.”

The warning, similar to those seen during investigations into pensions mis-selling, comes as investigations into the potential mis-selling of personal contract purchase (PCP) finance continue.

What is the FCA investigating?

The industry regulator has been investigating the use of Discretionary Finance Arrangements (DCAs) in the motor industry. Specifically, the FCA is investigating whether the use of DCAs led to consumers paying way more interest than they should have because car dealers acting as intermediaries – or other parties, like finance brokers – artificially increased their interest rate so they would earn more commission.

These hidden commissions are the basis for most car finance mis-selling claims.

While the regulator is looking into the use of DCAs before they were banned on 28th January 2021, there are some concerns that similar practices continued beyond this date. As such, the motor finance industry could face significant reckoning soon.

Disclosing that it had written to car finance firms like Barclays Partner Finance and Black Horse, the FCA said it was down to firms to examine their financial situations and plan for additional costs arising from dealing with and resolving complaints.

What is the current status of PCP mis-selling claims?

As of April 2024, the regulator has paused firms responding to complaints received on or after 17th November 2023. The pause is due to end on 25th September 2024, with the FCA using this time to continue its investigations into the scale of the problem; it is due to publish a report by the end of September.

Although the regulator has told firms not to respond to complaints, it has said they should continue investigating incoming complaints involving a DCA.

The FCA says that continuing these investigations will help ensure firms can act promptly to resolve complaints should it choose to lift its pause earlier than currently planned.

What does this mean for mis-sold consumers?

While the FCA is telling firms to ensure it can meet the costs of claims, consumers who are worried they may have been mis-sold and could be owed thousands are left waiting for the regulator to lift its pause.

If you’ve only recently heard about car finance mis-selling and are worried it may have happened to you, LawPlus Solicitors can help if:

  • You have had car finance in the past six years, then we can conduct a soft credit search to discover the details of your previous car finance agreements and investigate if yours may have been mis-sold and you’ve paid hidden commissions.
  • You have had car finance at any time since 2007 up until six years ago, and still have all your paperwork, we may still be able to investigate on your behalf.

Start your claim now.

Get in Touch

Fill in the form below to tell us your details, and we’ll get started.