PCP Customers overcharged by more than £1,000
The FCA released a report showing widespread mis-selling of PCP car deals, with many retailers not giving their customers all the facts required to make an informed decision. Many sellers were not acknowledging that they received commission for the deals, or that the commission was directly linked to the interest rates they were setting.
In order to gather accurate information about PCP practices, the FCA sent mystery shoppers to 122 motor retailers. Their investigation found the following:
- Only 31% of brokers explained that PCP customers do not own the car until all sums (including a balloon payment) have been paid.
- Just 28% of brokers disclosed the total amount payable and explained the consequences of a missed payment or agreement withdrawal.
- Out of 112 retailers, only 11 told the customer that a commission may be received for arranging the deal.
- On a typical motor finance agreement of £10,000, a customer may be charged £1,100 more in interest through a PCP than through a different financing plan.