Millions of drivers may be owed £1,000s in PCP finance scandal - but you don’t need a claims firm to get it back

The scandal involves Personal Contract Purchase (PCP) car finance agreements signed between 2007 and 2021, where dealers and brokers secretly pocketed commission by increasing customer interest rates — often without disclosing this to buyers.

These Discretionary Commission Arrangements (DCAs) were banned by the Financial Conduct Authority (FCA) in 2021.

Now, a looming Supreme Court ruling — expected soon after its April 2025 hearing — could trigger a nationwide redress scheme. The FCA has said it will confirm within six weeks of the court’s verdict whether it will force lenders to compensate affected customers. Some analysts say payouts could begin as early as late 2025 and total £10–30 billion, depending on how wide the compensation scheme goes.

But as TV adverts and text messages from claims management firms ramp up, industry experts are warning motorists not to rush in — as many people don’t actually need to use a paid firm at all.

“You don’t need to pay anyone to do this,” says claims firm owner

Tom Riley, who runs Car Finance Claims UK, a platform that helps consumers understand their rights, says many drivers wrongly assume they need to pay for help.

“People don’t realise they can do it themselves. You don’t need a claims firm to find out if you’re owed money. In fact, many of them charge up to 36% of your payout — and that’s money that should be in your pocket,” said Riley.

“We’ve even written a free template letter people can send directly to their finance provider. It takes two minutes. You don’t need to sign anything or give away a cut of your compensation.”

Drivers can access the free letter template at:

https://www.carfinanceclaimsuk.com/pcp-claims-template-letter

How the PCP Scandal Works

PCP finance lets drivers spread the cost of a car over a few years, usually followed by a large "balloon payment" if they want to keep it. But many lenders allowed brokers to adjust interest rates to earn higher commissions — often adding hundreds or even thousands in hidden costs.

According to the FCA, around 95% of UK car finance agreements included commission, and as many as 40% of those may have been mis-sold.

Typical refunds could range from £1,100 to £5,000, depending on the size and terms of the agreement.

What Happens Next?

• Supreme Court decision (expected by mid-2025) will determine whether customers automatically qualify for compensation.
• FCA will decide within 6 weeks if an industry-wide refund scheme will be launched.
• If approved, payouts could begin by late 2025 or early 2026.
• Claims involving DCAs are currently paused until December 4, 2025, giving time for the investigation to conclude.

Meanwhile, individual claims — especially those involving unaffordability or non-DCA-related issues — can still be submitted directly to lenders. If rejected, cases can be escalated to the Financial Ombudsman.

Key Advice for Motorists

• Don’t rush to sign with a claims company — they take a fee.
• Use a free letter template to contact your lender directly.
• Check if your PCP agreement involved hidden commission or inflated rates.
• Keep a record of your complaint for future reference.