Car dealerships had mis-sold Personal Car Purchase (PCP) insurance policies by the millions corresponding to each new car sold in Britain in 2015.
PCP, a policy included in most car financing deals, is said to have been poorly explained by car dealerships and sales representatives. Similar to Packaged Bank Accounts and Store Cards – dominating today’s potential new PPI – consumers were ‘rushed’ in filling out their forms, which included the PCP.
Car dealerships had even reached a point that they have buyers believe that PCP allows drivers or car owners the opportunity to profit from their contract as their car increases in value through the optional “balloon payment” figure.
The Financial Conduct Authority is leaning towards the favour of banks to fulfil the latter’s request of ending the payment protection insurance scandal as soon as possible. The City watchdog had conducted a consultation with consumers, banks, CMCs and the government in the practicality of imposing a payment protection insurance deadline.
Graham Hill, of the NACFB, says: “If the PPI claims lawyers conclude there is enough basis to put forward a mis-selling case on PCPs then, given the huge volumes in which these products have been sold to both private individuals and businesses, the car finance industry could be shaken to its roots.”
“While the PCP in itself can be an appropriate solution for many car owners, as it reduces the monthly payments quite significantly, the issue lies with the way these products have been sold.”
“Were people made aware of the increased interest rate charges on PCPs relative to hire purchase agreements, and were they misled about the prospect of equity, either deliberately or out of dealer naivety?”
“In the majority of cases, I suspect ignorance and confusion among dealers is to blame.”