Landmark Court Ruling Empowers Consumers in PCP Car Finance Claims

In recent years, the UK's car finance industry has faced intense scrutiny due to allegations of mis-selling and non-disclosure of commissions in Personal Contract Purchase (PCP) agreements. A landmark Court of Appeal ruling in October 2024 has set a significant precedent, empowering consumers to seek redress for unfair practices. This article delves into the implications of this ruling and guides consumers on how to pursue compensation.

Understanding the Court of Appeal Ruling

The case of Johnson v FirstRand Bank Limited, along with related cases, culminated in a pivotal decision by the Court of Appeal on 25 October 2024. The court found that lenders had mis-sold PCP agreements by failing to disclose commissions to consumers. This lack of transparency led to unfair financial relationships, as consumers were unaware that brokers or dealers could increase interest rates to receive higher commissions. The ruling emphasised that such non-disclosure is unlawful, setting a legal precedent for future claims.

Impact on the Car Finance Industry

The ruling has sent ripples through the car finance industry, prompting regulatory bodies and financial institutions to reassess their practices:

• Regulatory Investigations: The Financial Conduct Authority (FCA) launched a comprehensive investigation into motor finance commissions, focusing on the extent of non-disclosure and its impact on consumers.
• Financial Provisions: Major lenders, anticipating potential compensation claims, have set aside substantial funds. For instance, Lloyds Banking Group, one of the UK's largest motor finance providers, initially provisioned £450 million to address possible payouts. Subsequently, in February 2025, Lloyds increased this provision by an additional £700 million, bringing the total to £1.2 billion.

Consumer Empowerment and Compensation

The Court of Appeal's decision has empowered consumers to seek compensation for mis-sold PCP agreements:

• Eligibility: Consumers who entered into PCP or Hire Purchase agreements before 28 January 2021 may be eligible for compensation if undisclosed commissions influenced their contracts.
• Compensation Amounts: While individual compensation varies, the average payout is estimated at £1,100. However, some consumers have received more substantial sums, depending on the specifics of their agreements.

Source: https://www.fca.org.uk/publication/multi-firm-reviews/our-work-on-motor-finance-final-findings.pdf

Heirloom Fair Legal: Your Partner in Seeking Justice

At Heirloom Fair Legal, we are committed to assisting consumers affected by mis-sold PCP agreements. Our team of experienced professionals understands the intricacies of such cases and is dedicated to securing the compensation you deserve. We offer a streamlined process to evaluate your claim and guide you through each step, ensuring transparency and support throughout.

Take Action Today

If you believe you may have been mis-sold a PCP agreement, don't hesitate to seek the compensation you're entitled to. Use our website to initiate your claim through our streamlined online process. Our fully automated case management system is operational 24/7, allowing you to track your claim's progress, upload documents, and communicate with our team at your convenience. Let us help you navigate the legal landscape and achieve a fair resolution.

By staying informed and proactive, consumers can ensure they receive the compensation they deserve and contribute to a more transparent financial marketplace.