09/10/2013
Understanding Volkswagen PCP and Potential Mis-selling Claims
Personal Contract Plans (PCP) have become a popular way to finance vehicles, offering seemingly lower monthly payments and greater flexibility compared to traditional hire purchase (HP) agreements. Volkswagen, through its 'Volkswagen Solutions Personal Contract Plan', has offered this type of finance to many customers. However, recent investigations and reports, particularly from the Financial Conduct Authority (FCA), have highlighted a significant possibility of mis-selling within these agreements. If you financed a Volkswagen vehicle between April 1st, 2014, and December 31st, 2019, there's a substantial chance you may have been mis-sold your finance agreement, potentially due to hidden commissions or inflated excess mileage charges.
What is a Personal Contract Plan (PCP)?
A Personal Contract Plan (PCP) is a flexible car finance package typically lasting 2-3 years, designed for both new and used cars. It aims to provide lower monthly payments by deferring a portion of the car's value until the end of the agreement. This deferred amount is known as the Guaranteed Minimum Future Value (GMFV). With a PCP, Volkswagen Financial Services effectively purchases the car on your behalf. You contribute a deposit, usually between 10% and 30%, and then make agreed monthly instalments, often over 36 months. The GMFV is the minimum value Volkswagen Financial Services guarantees your car will be worth at the end of the agreement, shielding you from concerns about depreciation or future resale values.
How Does the Volkswagen Solutions Personal Contract Plan Work?
The Volkswagen Solutions PCP operates on the principles outlined above. You select your desired Volkswagen vehicle, and Volkswagen Financial Services finances its purchase. You'll pay an initial deposit, followed by monthly payments spread over a set term. Crucially, a significant portion of the car's value is held back as the GMFV. At the end of the contract, you typically have three options: return the car, trade it in for a new one, or pay the GMFV to own the car outright. The GMFV is a key component, as it determines the final repayment amount if you wish to keep the vehicle.
What Constitutes Mis-selling in PCP Agreements?
Mis-selling occurs when a financial product is not suitable for the customer's needs or circumstances, or when key information is withheld or misrepresented at the point of sale. In the context of Volkswagen PCP agreements, mis-selling has primarily been linked to:
- Hidden Commissions: Dealerships or finance providers may have received undisclosed commissions for arranging the finance. These commissions could have inflated the overall cost of the loan or influenced the interest rates offered.
- Excess Mileage Charges: The terms related to excess mileage might have been unclear, misleading, or excessively punitive. Customers may not have fully understood the per-mile charges for exceeding their agreed mileage limit, leading to unexpectedly high costs.
- Lack of Transparency: Essential details about the GMFV, depreciation, or the implications of exceeding mileage allowances may not have been clearly explained, preventing customers from making informed decisions.
Who is Eligible for a Mis-selling Claim?
According to reports and industry insights, you are likely eligible to make a claim if you entered into a car finance agreement, specifically either a PCP or HP agreement, with Volkswagen Financial Services (or associated brands) between the following dates:
1st of April 2014 to 31st of December 2019
The FCA's own reports suggest a very high probability (around 92%) that agreements within this period may have been mis-sold due to the factors mentioned above.
How to Make a Claim: The Process
If you believe you have been mis-sold your Volkswagen PCP or HP finance agreement, there are steps you can take to pursue a claim:
- Gather Your Documents: The most crucial step is to collect all relevant paperwork. This includes your finance agreement (PCP or HP), any statements, and proof of identity. If you don't have a signed copy, don't worry; efforts can often be made to obtain confirmation.
- Contact a Specialist Firm: Several firms specialise in handling these types of claims. They can assess your eligibility and guide you through the process. Many operate on a 'no win, no fee' basis.
- Provide Necessary Information: You will typically need to provide your personal details, the vehicle's details, and information about the finance agreement. This might include photo ID and proof of address to verify your identity.
- The Claim Process: Once your documents are submitted and your claim is accepted, the specialist firm will usually contact Volkswagen Financial Services on your behalf to request details of your agreement. They will then review this information to build your case.
- Resolution: If your claim is successful, you could receive compensation for the mis-sold aspects of your finance agreement. This could involve a refund of overpaid interest, charges, or commission.
Key Questions Answered
Q: What does 'mis-sold' mean in this context?
A: It means the finance agreement was not suitable for you, or crucial terms and conditions, such as hidden commissions or unfair excess mileage charges, were not properly disclosed at the point of sale.
Q: Is it a 'no win, no fee' situation?
A: Yes, reputable claims management companies and solicitors operate on a 'no win, no fee' basis. This means you won't pay anything if your claim is unsuccessful. Solicitors often have 'After the Event' (ATE) insurance in place to cover potential costs.
Q: What if I can't find my signed finance agreement?
A: This is common. You can often provide your current agreement along with photo ID and proof of address. In some cases, a confirmation document may be issued to allow the use of an unsigned agreement.
Q: Will making a claim affect my credit rating?
A: No, pursuing a mis-selling claim will not negatively impact your credit rating.
Q: Can I still claim if I'm still paying off my finance?
A: Yes, absolutely. Your current finance agreement will continue as normal. If your claim is successful, you will receive compensation, and you can then decide how to proceed with your car finance.
Q: What if I've already sold the car?
A: This is perfectly fine and is, in fact, a very common scenario for claims. As long as the finance agreement was taken out within the specified period (April 2014 - December 2019), you can still claim.
Q: How long does a claim typically take?
A: The average payout timeframe is usually between 3 to 9 months once all necessary documents are submitted and the process is initiated.
Q: What percentage does the claims company take? What about the solicitors?
A: Claims companies often have their fees covered by the solicitors. The solicitors' fees are typically a percentage of the compensation recovered, and this is usually deducted before you receive your payout. You should clarify the exact fee structure upfront.
Q: What is a Conditional Fee Agreement (CFA)?
A: A CFA is an agreement between you and your solicitor outlining the terms of their service, including how they will be paid based on the success of your claim.
Q: Can I make a claim on behalf of a family member?
A: Yes, provided you have their explicit permission and can provide documents in their name (finance agreement, ID, proof of address).
Q: What if my finance was a business lease?
A: Claims are generally not accepted for finance taken out through a business lease. However, personal PCP or HP agreements are eligible.
The Importance of Transparency and Fair Practice
The FCA's focus on financial conduct aims to ensure that consumers are treated fairly and are not misled. The potential for widespread mis-selling in PCP agreements underscores the importance of understanding the full terms and conditions of any finance package. If you suspect you have been a victim of mis-selling, pursuing a claim is a way to rectify the situation and potentially recover significant compensation. Companies specialising in these claims often boast high success rates and can navigate the complex process on your behalf, ensuring you receive the justice you deserve.
Remember: The key dates for potential mis-selling claims are between April 1st, 2014, and December 31st, 2019. If your Volkswagen finance agreement falls within this period, it is highly recommended to investigate the possibility of a claim.
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