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Car finance mis-selling: what you need to know about it
Editat de Adrian Defta
Many people took out car finance without being told how the deal was structured, or whether commission influenced the outcome. Recent FCA investigations have raised questions about whether some car finance agreements were mis-sold — and what affected consumers can do next. This guide explains what car finance mis-selling means, who may be affected, and your options — clearly and without pressure.
At a glance
1
What happened?
The FCA is investigating car finance agreements where commission arrangements may have influenced the interest rate or terms offered to consumers.
2
Who may be affected?
People who took out car finance such as PCP or Hire Purchase, particularly where commission or pricing was not clearly explained at the time.
3
What you can do?
You can wait for further updates, complain directly to your lender for free, or seek help understanding your agreement before deciding your next step.
What is car finance mis-selling?
Car finance mis-selling refers to situations where a car finance agreement may not have been sold in a fair or transparent way. This can happen when key information about how the finance was structured, how the interest rate was set, or how the lender and broker were paid was not clearly explained to the customer at the time.
In recent years, the Financial Conduct Authority (FCA) has raised concerns about certain car finance practices, particularly where commission arrangements may have influenced the cost of borrowing without the customer being aware. These concerns have led to investigations into whether some agreements were mis-sold and whether consumers were treated fairly.
Mis-selling does not mean that every car finance agreement is faulty, or that everyone is entitled to compensation. Whether an agreement was mis-sold depends on the individual circumstances, the information provided at the time, and how the finance was presented to the customer.
People often describe this issue in different ways — for example, saying they were mis-sold car finance or mis-sold a car on finance. In practice, these phrases all refer to the same underlying question: whether the agreement was sold fairly and with enough information for the customer to make an informed decision.
Common examples of potential mis-selling
Examples can include:
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Being told the interest rate was fixed when it could have been lower
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Not being informed that commission could affect the cost of the finance
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Being pressured to take a finance deal without clear comparison
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Not being given clear documentation or explanations before signing
Who may be affected by car finance mis-selling?
Car finance mis-selling does not apply to everyone, but it may be relevant to people who took out car finance and were not given clear or complete information at the time. The issue most commonly relates to how the agreement was explained, how the interest rate was set, and whether commission arrangements were disclosed.
It may affect people who used finance options such as:
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Personal Contract Purchase (PCP)
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Hire Purchase (HP)
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Other dealer-arranged car finance agreements
These agreements were often arranged through car dealerships or brokers rather than directly with a lender.
Many of the FCA’s concerns relate to agreements taken out in previous years, particularly before changes were made to how commission could be structured and applied. However, whether an agreement was mis-sold depends on the individual circumstances at the time the finance was arranged.
Being affected does not automatically mean that an agreement was mis-sold or that a complaint will succeed. Each case depends on the specific details of the agreement, the information provided, and how the finance was presented to the customer.
You may want to look more closely if:
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You were not told that commission could affect the interest rate
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You were led to believe the finance terms were fixed or non-negotiable
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You did not receive a clear explanation or documentation before signing
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You felt pressured to accept the finance offered by the dealer
What are your options if you believe your car finance was mis-sold?
Option 1: Take no action for now
Some people choose to wait for further updates or clarification from the FCA or lenders before doing anything.
This may be appropriate if you are unsure whether the issue applies to your agreement or if you want more information before deciding your next step.
Option 2: Complain directly to your lender (free)
You can submit a complaint directly to your lender at no cost.
This usually involves explaining why you believe the agreement was not sold fairly and providing any relevant information you have about how the finance was arranged.
👉 Some people complain directly but receive unclear or frustrating responses. What can go wrong when you complain to your car finance lender
Option 3: Use a claims management company (CMC)
Some people choose to use a claims management company to handle the complaint process on their behalf. These companies typically charge a fee if a complaint is successful, which reduces any redress received. The FCA has previously stated that consumers can complain directly without paying a third party, and that using a CMC does not guarantee a better outcome.
Some people only realise later that they have already signed a contract with a claims management company and are unsure what this means or whether they can exit the agreement.
Option 4: Get help understanding your agreement before deciding
If you are unsure whether your agreement may be affected, you may find it helpful to first understand how your car finance was structured and what information should have been provided at the time. This can help you decide whether to complain directly, seek further advice, or take no action at all.
Important things to keep in mind
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Not every agreement will be considered mis-sold
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Outcomes depend on individual circumstances
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Complaints can take time to review
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No outcome can be guaranteed
What does the FCA say about car finance mis-selling and claims companies?
The Financial Conduct Authority (FCA) is the UK regulator responsible for overseeing financial services and ensuring that consumers are treated fairly. In relation to car finance, the FCA has investigated certain commission practices and raised concerns about whether some agreements may have been sold without sufficient transparency.
The FCA has made clear that consumers are entitled to complain directly to their lender if they believe they have been treated unfairly.
Importantly, consumers do not need to use a claims management company in order to raise a complaint, and doing so does not guarantee a better outcome.
Claims management companies typically charge a percentage of any redress awarded, which reduces the amount a consumer receives.
The FCA has previously warned consumers to be cautious about paying for services that they can access for free, particularly where outcomes are uncertain.
For many people, the main difficulty is not submitting a complaint, but understanding whether their agreement may be affected and what information should have been provided at the time. Taking the time to understand your car finance agreement can help you make an informed decision about whether to complain directly, seek further support, or take no action.
A note on expectations
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The FCA has also emphasised that not every complaint will result in redress, and that each case must be assessed on its individual facts.
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No outcome can be guaranteed, regardless of whether a complaint is made directly or through a third party.
You can read more about the FCA’s work on car finance and consumer complaints on the FCA’s official website.
This is particularly relevant for consumers who are already tied into a claims management company contract.
Common questions about car finance mis-selling
1. What is car finance mis-selling?
Car finance mis-selling refers to situations where a finance agreement may not have been sold in a fair or transparent way. This can include cases where important information about interest rates, commission, or how the agreement worked was not clearly explained at the time.
2. Does car finance mis-selling apply to everyone?
No. Not every car finance agreement will be affected.
Whether an agreement was mis-sold depends on the individual circumstances, the information provided, and how the finance was presented to the customer.
3. What types of car finance could be affected?
The issue most commonly relates to dealer-arranged car finance, such as Personal Contract Purchase (PCP) and Hire Purchase (HP).
These agreements were often arranged through car dealerships or brokers rather than directly with lenders.
4. Do I need to use a claims management company (CMC)?
No. Consumers can complain directly to their lender for free.
The FCA has made clear that using a claims management company is optional and does not guarantee a better outcome.
5. Can I complain directly to my lender?
Yes. Lenders are required to have a complaints process in place.
You can submit a complaint yourself without paying a third party, and the lender must review it in line with regulatory requirements.
6. How long does a car finance complaint take?
Complaints can take several weeks or months to be reviewed, depending on the complexity of the case and the lender involved.
There is no fixed timeline, and outcomes vary from case to case.
7. Will I definitely receive compensation if I complain?
No. There is no guarantee of compensation.
Each complaint is assessed individually, and outcomes depend on the facts of the case and whether the agreement is found to have been sold unfairly.
8. How can ProveIt help?
ProveIt does not submit complaints on your behalf or act as a claims management company.
Instead, ProveIt helps you understand your car finance agreement and the complaint process, we guide you through the whole process making sure you are sending the right complaint and any follow up actions you might need. Moreover, we are making sure you are compensated according to the FCA guideline. If we believe the finance company should have been compensated you more, we help you through the FOS complaint process also.
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