Personal contract plans (PCPs), a method of finance commonly used for purchasing cars, have come under fire from The National Association of Commercial Finance Brokers (NACFB) – who have warned that the plans could face financial mis-selling probes in the near future.
In 2015, some one million Britons bought into PCP schemes – loans which favour lower monthly payments than a typical hire purchase (HP) agreement, but tend to impose a ‘balloon payment’ upon buyers at the end of their contracts.
But the NACFB say that those who opt for a PCP scheme will typically pay far more in interest than those using traditional hire purchase (HP).
“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,” warned NACFB board member, Graham Hill.
“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. But this will not help them and the finance providers behind them if, in the months ahead, PCPs are judged to have been mis-sold.
“In the event that this happens, a significant number of consumers and business owners could be in for a sizeable cash windfall from the cars, motorcycles and vans they have purchased,” he warned.
Carter Lemon Camerons LLP Solicitors is a City law firm with experience in providing legal services to businesses and victims of financial mis-selling. Unlike many City practices we are happy to act in smaller private legal matters, bringing the same care and consideration as we do to large commercial matters. For more information about our swaps and financial mis-selling services, please contact Chris Corney or telephone: 020 7406 1000.