Motor Finance Claims Guide – All You Need To Know

What are mis-sold motor vehicle finance claims?

Mis-sold motor vehicle finance refers to the practice in which a lender or dealer sells a vehicle finance agreement without providing full or accurate information about the terms, conditions or costs associated with the loan. This includes failure to inform their customer of any commissions or interest being charged as part of the agreement.

Car finance claims look at helping consumers who have fallen victim to mis-selling claim back compensation.

At Barings Law, we have been working diligently on mis-sold motor vehicle finance claims, liaising with the finance providers and the courts to come to an appropriate outcome for our clients. In addition to pursuing mis-selling claims, we also investigate potential affordability complaints where customers may have been sold finance that should have been deemed unsuitable for their needs and was unaffordable, given their personal circumstances. This means we can offer our clients more than one route to claim compensation.

How do I know if I’ve been mis-sold motor vehicle finance?

You may have been mis-sold your finance deal if any of the following apply to you:

You were not provided with any information about alternative options that might have been better suited to you.
The finance amount exceeded the necessary sum without a clear rationale.
The dealer/broker failed to conduct affordability checks or discuss more affordable options tailored to your situation.
You felt pressured into accepting a Personal Contract Purchase (PCP) or HP (Hire Purchase) agreement.
Details regarding the salesperson’s commission from your agreement remain undisclosed.
It was not explained that you would not automatically own the car outright after the term without making the final ‘balloon payment’.
The dealer or broker did not adequately explain the agreement with you, including the terms and conditions, such as who is financially responsible for repairs.
The estimated mileage limit provided to you was unrealistic and insufficient.

If you had a PCP or HP agreement between April 2007 and January 2021* you may have been mis-sold and could now be eligible to submit a claim with Barings Law.

*If your lender is Moneybarn, Oodle, or Advantage, you are not eligible to make a complaint about discretionary commission arrangements. Instead, you may be eligible to make a complaint about the affordability of your finance agreement. To be eligible for this type of complaint your finance agreement must have been entered into between February 2018 and 2024.

What’s the average payout for mis-sold motor vehicle finance claims?

For mis-sold motor vehicle finance claims, the amount will vary on a case-by-case basis. The amount customers have been overcharged will fluctuate, with the total depending on the cost of the vehicle, the interest rate applied, and the duration of the contract.

Claims for affordability complaints are now settling at a rapid rate, with compensation awards for our clients averaging £5,181*. These settlements have also included the removal of negative credit marks and interest write-offs. *Figure based on the total settlement amount divided by the number of clients we have won compensation for. Figure is before deduction for legal fees/disbursements,

How is mis-sold motor finance compensation awarded?

There are various ways that compensation can be awarded. These include:

Cash compensation payments made directly to Barings and passed on to the client.
Balance write-offs of the amount, or part of the amount, you owe to the defendant

If the defendant (dealer/lender) pays a lump sum directly to Barings, we will deduct our success fees and transfer you the remaining balance.

If the defendant offers you a balance write-off, and you don’t receive the damages directly, we will seek payment of our success fee directly from you. This will equal our success fee percentage of the amount which the defendant has agreed to write off.

We appreciate that clients may not be able to pay all our fees in one go. Therefore, we encourage our clients to contact us to discuss how they will pay our fees on a payment plan.

How long does a mis-sold motor finance claim take?

The time it takes for a mis-sold motor finance claim can vary case to case and depend primarily on the action taken by the defendant. As mentioned, there are two routes in claiming compensation with Barings Law. We can make your claim on grounds of Undisclosed Commission (Discretionary Commission Arrangements) or Affordability.

Affordability complaints can settle within three months but often take up to 12 months as further evidence is often required. The time it takes to settle can also depend on the defendant’s response time and/or if they accept or deny liability.

Undisclosed Commission claims can take considerably longer to conclude due to the area of law being more contentious, which is subject to court and regulatory intervention. Many of these claims are also dependant on the current Financial Conduct Authority investigation into hidden commissions. That investigation, which is set to conclude in September 2024, has prompted a pause on motor finance claims if done on an individual basis. This means lenders are not required to make any decisions until the investigation has concluded.

Barings Law have issued thousands of car finance claims to court, which means that we have thousands of clients who are unaffected by the pause in proceedings and there is no unnecessary delay to the claims process.

Disclaimer: Please note that this information is based on claims that have already been issued. We cannot guarantee the same outcome for new clients. However, we will remain transparent throughout the process and inform you of any changes that may affect your claim.

Update August 2024: On July 30, 2024, the FCA released a further statement extending the deadline for motor finance firms to respond to complaints and the outcome of the investigation. The FCA has proposed extending the resolution deadline from September 2024 to the end of May 2025. Motor finance firms have also been given until at least December 4, 2025, to provide a final response to complaints. For the full update, please click here.

Can I submit a claim if I missed payments on my finance agreement?

Yes, you could submit a claim if you missed payments on your finance agreement. The validity of your claim for mis-sold motor finance depends on whether the finance was misrepresented to you or if there were unfair or unethical practices involved in the sale, rather than your payment history.

What information do I need to start a mis-sold motor vehicle finance claim?

If you believe you have been mis-sold your finance agreement and want to take things further, take the time to gather your agreement documents, as they will be crucial in supporting your claim and providing evidence of mis-selling.

You are likely to need:

The finance agreement and other paperwork from the lender or dealership
Any correspondence with the lender or dealership
Bank statements and payment records
Any promotional material provided to you during the purchase process

Don’t worry if you can’t get them all together. Your finance agreement is the most important thing, everything else is additional evidence.

I do not have any previous motor finance contracts; how can I get them?

We understand that you may not have kept contracts for your previous vehicles, but the good news is that they’re relatively easy to get hold of.

Lenders are obligated to keep records of your financial details for six years, so it would be a good place to start by contacting them directly or by checking your credit report as your records should be listed on there.

If your agreement is older than six years, it may be more difficult. Sometimes lenders keep hold of records for longer than six years, so if you can reach out to them, it is worth a try. If not, you could attempt to contact the dealer you bought the vehicle from as they may have some records.

Failing that, we can issue a data subject access request (DSAR) to your lender with your consent, however this process can mean your claim will take significantly longer.

Submitting a Mis-sold Motor Finance Claim

If you believe you have been mis-sold your car finance agreement, you may be eligible to submit a claim with Barings Law. Our expert team specialises in financial mis-selling, and we’re here to help you navigate the complexities of your case.

What’s more, your mis-sold motor finance claim will be carried out on a no-win no-fee basis, meaning there is no financial risk to you for making your claim. If we do not win your case for you, you won’t pay us a penny for our services.

All you need to do is fill in the form by clicking the button below. Our customer service team will obtain the documentation you have gathered, most importantly your finance agreement, so that our dedicated legal team can get to work investigating your case.

Pursue Legal Action with Barings Law

If negotiations with the lender or dealership prove unsuccessful, Barings Law will not hesitate to pursue further legal action on your behalf. Our experienced solicitors are well versed in handling cases related to mis-selling, and we will work tirelessly to fight for your best interests in court.

With Barings Law by your side, you can trust that your case will be handled with the highest level of expertise and professionalism, giving you the best possible chance of securing a favourable outcome.