Car Finance and PCP Complaint to Financial Ombudsman 2026

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Car finance is currently one of the highest-volume complaint areas at the Financial Ombudsman Service. Following a Supreme Court ruling and a major FCA review into discretionary commission arrangements (DCAs) in the motor finance industry, hundreds of thousands of consumers who took out personal contract purchase (PCP) agreements, hire purchase (HP) agreements, and other forms of motor finance may be entitled to significant redress.

If you financed a car or other vehicle between 2007 and January 2021 and a dealer or broker received a commission from the lender that was linked to the interest rate you paid — and you were not told about that commission or its effect — you may have a valid complaint. Awards in successful cases can run into thousands of pounds per agreement.

This guide explains the basis of PCP and car finance complaints, what the FOS process involves, how to prepare your claim, and what to do at each stage of the process in 2026.

When Do You Need This Guide?

You should read this guide if:

• You took out a PCP, HP, conditional sale, or personal loan specifically to finance a car or other vehicle at any point between April 2007 and January 2021.
• You dealt with a car dealer or broker who introduced your finance to a lender, and you were not clearly told that the dealer or broker was being paid a commission.
• You were not told that the commission was calculated in a way that gave the dealer or broker a financial incentive to charge you a higher interest rate.
• You believe the overall terms of your finance agreement were inappropriate for your circumstances or were not explained to you clearly.
• You have already received correspondence from the FCA or your lender about the review, or you have seen press coverage and wish to understand your position.

What the Discretionary Commission Issue Means

Between April 2007 and 28 January 2021, many car finance lenders allowed dealers and brokers to set or vary the interest rate on a finance agreement within a range. The dealer received a higher commission if it set a higher rate. This practice is known as a discretionary commission arrangement (DCA).

The FCA found that this created a clear conflict of interest: dealers had a financial incentive to charge customers more, and customers were generally unaware of the arrangement. On 28 January 2021, the FCA banned this practice.

In October 2024, the Court of Appeal found that certain undisclosed commission arrangements in motor finance were unlawful. The Supreme Court subsequently heard the case, and the outcome — which will determine the precise scope and basis of any industry-wide redress scheme — has been one of the most significant financial consumer law developments in recent years. As this area of law continues to develop in 2026, consumers should act promptly to preserve their position.

The FCA has put in place a scheme to handle complaints systematically, pausing some complaint handling deadlines to allow lenders and the FOS to manage the volume. You should check the current FCA and FOS guidance on the motor finance review when submitting your complaint, as specific procedural rules may have been updated since this guide was published.

What a FOS PCP Complaint Involves

A PCP or car finance complaint to the FOS follows the standard two-stage process. You first complain to the lender (not the dealer — the dealer was likely not the regulated lender). The lender has eight weeks to issue a final response. If the response is unsatisfactory or no response has been issued, you can take the complaint to the FOS.

Given the scale of the motor finance review, the FOS and the FCA have issued special procedural guidance. Some lenders have been granted extended time to respond to complaints. The FOS is currently prioritising complaints in cohorts. You should nonetheless submit your complaint as soon as possible so that your position is logged and preserved.

Step by Step: How to Make a PCP or Car Finance Complaint

Step 1 — Identify Your Finance Agreement

Locate your finance agreement. This should be a written document headed with the lender’s name (not the dealer’s name) and containing the APR, total amount payable, and the agreement number. Common lenders in the motor finance sector include Black Horse (Lloyds Banking Group), Close Brothers Motor Finance, Motonovo Finance (FirstRand), Santander Consumer Finance, and many others.

If you cannot find the agreement, write to the lender asking for a copy under your right to a copy of a credit agreement under the Consumer Credit Act 1974 (Section 77 or 78). The lender must provide this within 12 working days. A £1 fee may apply.

Step 2 — Check Whether a Discretionary Commission Arrangement Applied

You can ask the lender in writing whether your agreement involved a discretionary commission arrangement in which the dealer or broker had the ability to set or vary your interest rate. The lender should tell you.

If the lender confirms a DCA applied, or if your agreement was arranged before 28 January 2021 and the lender refuses to confirm one way or the other, you have a basis to complain.

Step 3 — Write a Formal Complaint Letter to the Lender

Address your complaint to the lender’s complaints department. Your letter should state:

• Your full name, address, and the agreement number.
• The date of the agreement, the vehicle involved, and the amount financed.
• That you believe a discretionary commission arrangement may have applied to your agreement.
• That you were not informed of any commission paid to the dealer or broker, or of the dealer’s ability to increase your interest rate in exchange for a higher commission.
• That you request the lender confirm whether a DCA applied, disclose the commission paid, and explain how the interest rate was set.
• What redress you are seeking — typically a refund of the excess interest you paid as a result of the DCA, plus interest on that sum.

Keep a copy of the letter and note the date of sending.

Step 4 — Wait for the Lender’s Response

The lender has eight weeks to respond. Given the FCA review, some lenders have been granted an extension. The lender may issue a holding letter explaining that your complaint is being handled as part of the motor finance review. Keep this correspondence.

If the lender rejects your complaint, do not simply accept the rejection. Lenders are routinely rejecting complaints at this stage with the expectation that the FOS or a redress scheme will ultimately determine the issue.

Step 5 — Gather Your Evidence

Before submitting to the FOS, assemble:

• The original finance agreement.
• Any correspondence with the dealer about finance options and interest rates.
• Any finance illustrations, key facts documents, or pre-contract information provided to you.
• Statements showing the payments you made.
• The lender’s final response or rejection letter.
• Any evidence of the APR you were quoted compared with rates generally available at the time (useful background, though not essential).
• A calculation, even approximate, of the extra interest you paid. If you paid an APR of, for example, 12% when the base rate available was 9%, the difference over the life of a £15,000 agreement can amount to thousands of pounds.

Step 6 — Submit to the FOS

Submit your complaint to the FOS online at financial-ombudsman.org.uk. Check the FOS website for any specific guidance on motor finance complaints current at the time of your submission, as the FOS has issued periodic updates on how these complaints are being handled.

In your submission, explain clearly:

• The date and nature of the finance agreement.
• The basis of your complaint (undisclosed DCA, conflict of interest, failure to disclose commission).
• The financial amount at stake.
• What outcome you want.

Attach all supporting documents.

Step 7 — Await Allocation and Investigation

Given the volume of complaints, the FOS is working through motor finance cases in cohorts. You may receive an acknowledgement followed by a wait before your case is actively investigated. Do not withdraw your complaint during this period. Your place in the queue is preserved from the date you submitted.

When the investigator contacts you, respond promptly and provide any additional information requested.

Step 8 — Accept or Challenge the Outcome

If the outcome is in your favour, you will typically be offered a sum representing the excess interest paid plus compensatory interest. Review the calculation carefully against your own figures. If you believe the award is too low, you can ask for an ombudsman to review the matter.

Key Deadlines

What Happens After You Submit

The FOS is handling a very large volume of motor finance complaints. Processing times in this category are longer than in other areas. However, the FOS has confirmed that it is actively working through these cases. If a broader industry redress scheme is established by the FCA, it may run in parallel with or supersede the FOS process for some consumers. Staying engaged with both the FCA updates and the FOS process is important.

Awards in successful cases typically include a refund of the excess interest charged as a result of the DCA, plus interest at 8% per annum from the date of overpayment to the date of redress. For a £10,000 to £20,000 car purchased on finance, awards of £1,000 to £5,000 are not uncommon, with larger awards possible for higher-value agreements or multiple agreements.

Common Mistakes

1. Complaining to the dealer rather than the lender. The dealer was typically not the regulated firm. The lender — whose name appears on the finance agreement — is the entity regulated by the FCA and subject to the FOS.
2. Accepting the first rejection without escalating. Many lenders are issuing routine rejections. A rejection at the internal stage is not the end of the process.
3. Assuming only PCP agreements are affected. HP agreements, conditional sale agreements, and personal loans used to purchase vehicles may all be affected if a DCA applied.
4. Not retaining the original agreement. You need the lender’s name and agreement number to make a complaint. If you cannot find the agreement, request a copy promptly.
5. Missing the FOS deadline after the lender’s final response. Even in a review situation, the six-month rule applies. Do not file the letter and forget about it.
6. Using a claims management company when it is not necessary. Claims management companies charge up to 36% of any award. The FOS process is free and you can use it yourself or with document support from eLitigant at a fraction of the cost.
7. Claiming for post-January 2021 agreements. The DCA ban came into force on 28 January 2021. Agreements entered into after that date are less likely to involve the same issue, though other mis-selling grounds may apply.

The Rules That Apply

PCP and car finance complaints are governed by:

• The Consumer Credit Act 1974 (requirements for written agreements, right to copies, and unfair relationships).
• The FCA Handbook, CONC — Consumer Credit sourcebook (conduct of business rules for credit brokers and lenders).
• FCA PS 20/8 — Discretionary Commission Arrangements ban (effective 28 January 2021).
• The FCA Motor Finance Review (initiated January 2024) and any subsequent remediation scheme.
• The Financial Services and Markets Act 2000 (FOS jurisdiction and binding decisions).
• The Court of Appeal and Supreme Court decisions on undisclosed commission arrangements (2024–2025).

The FOS applies the law alongside a fair and reasonable standard, which in this context is influenced heavily by the FCA’s own findings about the DCA practice.

Related Court Forms & Guides

• Form N260: Statement of Costs — the costs schedule used at summary assessment.
• Form N244: Application Notice — the form for interim applications.
• Start a Money Claim Online (OCMC) — where most civil money claims begin.
• Particulars of Claim — setting out the basis of your claim.
• Civil Court Forms Index — every civil court form guide in one place.

How Chris Can Help

PCP and car finance claims require locating the original agreement, calculating the excess interest paid, writing a precise complaint letter to the lender, and navigating the FOS submission process correctly. Chris can help you draft a clear, well-evidenced complaint letter and FOS submission that presents your case in the strongest possible light — without the percentage fees charged by claims management companies.

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Frequently asked questions

Who do I complain to — the dealer or the lender?

You complain to the lender, not the dealer. The dealer was typically not the regulated firm. The lender — whose name appears on your finance agreement, alongside the APR, total amount payable and agreement number — is the entity regulated by the FCA and subject to the Financial Ombudsman. Complaining to the dealer is one of the most common mistakes.

What types of finance are covered?

It is not only PCP agreements. Hire purchase (HP), conditional sale agreements and personal loans used to buy a vehicle may all be affected if a discretionary commission arrangement applied. The agreements in scope were generally taken out between April 2007 and 28 January 2021, the date the FCA banned the practice.

What is a discretionary commission arrangement (DCA)?

Between April 2007 and 28 January 2021, many lenders let dealers and brokers set or vary your interest rate within a range, with the dealer earning a higher commission for a higher rate. The FCA found this created a conflict of interest that customers were generally unaware of. If your agreement involved a DCA you were not told about, you may have a basis to complain.

What is the process and how long do I have?

It follows the standard two-stage route: you complain to the lender, which has eight weeks to issue a final response (some lenders have been granted extensions under the FCA review), then you can take it to the FOS. There is a six-month window from the lender’s final response letter to refer to the FOS. Check current FCA and FOS guidance, as procedural rules in the motor finance review may have been updated.

What redress can I expect?

Successful cases typically involve a refund of the excess interest charged as a result of the DCA, plus interest. The exact figures depend on your agreement, so check the current position for your situation. Always review any award against your own calculation before accepting; if you think it is too low, you can ask for an ombudsman to review it.

The lender rejected my complaint — is that the end?

No. Many lenders are issuing routine rejections at the internal stage, expecting the FOS or a redress scheme to decide the issue. A rejection is not the end of the process — keep the correspondence and escalate to the Financial Ombudsman within the time limit.

Related guides: More consumer and finance guides · Ask Chris about your situation · All civil court forms