Car Finance Under Fire: New FCA Investigations

FCA Steps Up Scrutiny on PCP Car Finance Deals

UK motorists who have used Personal Contract Purchase (PCP) car finance in recent years may soon have questions to answer and, potentially, claims to pursue. The Financial Conduct Authority (FCA) has launched fresh investigations into the selling practices of car finance providers, focusing on whether PCP deals were mis-sold to consumers lacking a full understanding of the terms.

PCP arrangements, now one of the most common ways to drive a new vehicle off the forecourt, offer lower monthly payments and an optional balloon payment at the end. However, recent complaints suggest that some consumers were not made fully aware of crucial aspects, such as total payment obligations, interest calculations, or final settlement sums. This has prompted the FCA to request detailed sales records, interrogating whether customers were fairly advised.

"Understanding APR isn’t just about percentages—it’s about knowing what you’ll pay in real terms. We break it down so you can make informed decisions." As with PPI before it, the narrative is shifting towards consumer protection and clarity. Lenders, meanwhile, must now demonstrate that they communicated the financial risks and options to each applicant.

What Are the Risks and Your Rights?

While PCP deals can offer attractive flexibility, they are complex. The most common issues flagged in complaints include:

• Lack of transparency about total costs and fees
• Inflated interest rates through discretionary commission models
• Insufficient explanation of end-of-term options and charges
• Pressure-selling or inadequate suitability checks

For context, FCA data shows a considerable rise in PCP complaints since 2020. The below table summarises recent trends:

YearNumber of PCP Complaints202012,800202114,300202216,100The FCA’s intervention signals a clear warning to lenders: practices that lack transparency or put the consumer at a disadvantage may be deemed mis-selling. For consumers, this means heightened opportunity to have cases reviewed and potentially to claim redress if found to have been misled or inadequately advised.

Industry experts suggest motorists dig out their old agreements and check correspondence for any ambiguity in the sale process or unexplained fees. Documented concerns, including evidence of sales tactics, could prove pivotal should complaints escalate.

Navigating the Next Steps Wisely

With ongoing FCA scrutiny, both buyers and brokers will need to address how deals are explained and agreed. For consumers, now is a prudent time to:

• Gather all paperwork related to their car finance deals
• Carefully review the terms, especially around interest rates and end-of-term options
• Seek impartial advice if anything remains unclear
• Lodge a complaint with the lender or the Financial Ombudsman if mis-selling is suspected

Most importantly, being informed is the frontline defence. The wave of complaints and regulatory focus underscores the need for clarity in every financial commitment.

Kandoo will continue to offer clear, jargon-free guidance to consumers exploring car finance. If you’re concerned about a previous agreement, or you’d like to understand your options, contact us for expert advice. Consumers have rights—the FCA’s actions are a timely reminder to use them.