What is PCP?

A Personal Contract Purchase (PCP) is a common type of vehicle finance where you make lower monthly payments for a set period, followed by a final “balloon payment” if you wish to own the vehicle outright.
Until that balloon payment is made, you do not own the vehicle — and many consumers have found they were not given a full or fair explanation of how this arrangement worked.

Why many PCP agreements were mis-sold

The Financial Conduct Authority (FCA) has identified widespread evidence of mis-selling across the motor-finance industry. For years, some lenders and car dealers operated discretionary commission arrangements (DCAs) — allowing brokers to increase the interest rate charged to customers in return for higher commission payments.
This practice, often not disclosed to consumers, led many people to overpay thousands of pounds for their car finance.
Other examples of mis-selling include:

• Failing to disclose dealer commissions or incentives.
• Giving inadequate explanations of the product — including the balloon payment, mileage restrictions, or end-of-term options.
• Failing to carry out proper affordability checks.
• Recommending a PCP when a more suitable or cheaper option was available.

The FCA has now banned discretionary commission models and is reviewing whether a redress scheme should be introduced for affected consumers.

How do I know if I was mis-sold?

You may have a valid claim if you:

• Took out a car or van finance agreement (PCP, HP, etc.) since 2007.
• Were not told about commissions or incentives paid to the dealer.
• Were pressured into a specific type of finance.
• Found the costs or balloon payment unclear or misleading.
• Believe you were charged a higher rate of interest than you should have been.

You can still claim even if your agreement has ended or if you still own the vehicle.

The FCA’s current position (2025 update)

The FCA has stated that:

• It is considering an industry-wide redress scheme for consumers affected by hidden or discretionary commissions.
• Guidance on this is expected to be finalised during 2025, with a potential compensation process launching in early 2026.
• Consumers do not have to wait for the scheme to make a complaint or claim — you can take action now.

(Sources: FCA “CP25/27: Motor finance consumer redress scheme”, October 2025)

Legal developments: the “Hopcraft” Supreme Court Case

In August 2025, the UK Supreme Court handed down its judgment in the combined cases of Hopcraft & Others v Close Brothers Ltd, Johnson & Others v FirstRand Bank Ltd, and Wrench v FirstRand Bank Ltd.
This landmark decision clarified how the law applies to commission-based motor-finance arrangements:

• The Court ruled that car dealers were not automatically fiduciaries, meaning not every commission creates a “bribery” claim.
• However, the Court found that some arrangements could still lead to an “unfair relationship” under Section 140A of the Consumer Credit Act 1974, where the commission was large, undisclosed, or created a conflict of interest.
• The FCA confirmed that this decision will inform its next phase of regulatory action and consumer redress.

In short: claims remain viable — but the legal and regulatory routes are evolving.

Existing clients – exit fees and guidance updates

If you are already an SJS Legal client with an active PCP or motor-finance claim:

• You may be subject to exit fees if you decide to discontinue your claim before it concludes.
• We are awaiting updated guidance from both the FCA and the Solicitors Regulation Authority (SRA) regarding how existing claims and costs should be managed once the new redress framework is finalised.
• As soon as further guidance is issued, we will contact our clients to confirm any changes to:
  • Fee structures and exit terms
  • Claim handling procedures
  • Eligibility under a statutory redress scheme

Until then, we will continue to act under the terms of your current retainer and keep you updated on all developments.

Litigation remains a viable route

Although the FCA may establish a compensation scheme, litigation continues to be a strong and viable option for many clients.
At SJS Legal, we have successfully represented consumers in County Court proceedings against major lenders, including:

• Black Horse Limited

These cases have resulted in favourable outcomes for our clients and demonstrate our readiness to pursue formal court action where appropriate.
Our experienced litigation team will continue to assess each case on its merits — advising whether to proceed through regulatory channels or via direct court action to achieve the best possible outcome.

How much compensation could I receive?

The value of each claim varies depending on:

• The size and term of your finance agreement
• The interest rate charged
• The commission paid to the dealer
• The degree of non-disclosure or unfairness involved

The FCA’s own examples suggest compensation could average around £700 per agreement — but many claims are worth significantly more.

Our approach – No Win, No Fee

We operate on a No Win, No Fee basis*:

• No upfront costs
• No charge if your claim is unsuccessful
• Transparent terms and regular updates throughout your case

*Subject to our standard terms and conditions.

How to start your claim

Starting a PCP claim is simple:

1. Call us on 0151 909 6120 or email info@sjs-legal.co.uk
2. Tell us what you know — even if you don’t have your finance documents. If you know who you paid, we can usually trace the rest.
3. Our specialists will review your information, confirm whether you have a claim, and guide you through your options.

Thousands of drivers may have been affected by these unfair practices — don’t miss out on the compensation you could be entitled to.

Important notices

• This page is for general information only and does not constitute legal advice.
• Time limits apply to all claims — please seek advice promptly.
• Compensation outcomes may vary and depend on individual circumstances.