PCP Turned into a Fixed Sum Loan - Ombudsman Volvo/Santander

Picard91

Afternoon All,

I just wanted to write about my experience here in case anyone else had/has something similar.

So almost 4 years ago I signed a PCP agreement for a Volvo Leeds through Santander. Due to a change in working circumstances last year (August) I wanted to Voluntary Terminate the agreement (It was a 4 year agreement, so 1 year early).

I was told as I had taken a Fixed Sum Loan out for the car and not a PCP i did not have this right. This was quite a shock and I was a little confused. I did some research online and found 3 or 4 similar cases with Volvo and 1 for a Toyota. I looked at the Fixed Sum Loan agreements online and knew this was not what the dealer had told me I was entering at the time of purchase, a Fixed sum loan was not even mentioned. I checked the paperwork and despite the headings of the paperwork saying PCP agreement in the small print it was worded as a fixed sum loan. I wrote a complaint to Santander telling them I believed I was mis-sold this agreement and believed I was entitled to VT the agreement. They disagreed as there was no evidence and I had signed the paperwork. I asked them for a final decision letter so I could approach the Ombudsman service.

It took around 7/8 months for an Ombudsman to look at the case but he found I was mis-sold the agreement and that the paperwork was mis-leading and most unusual. Not only this Santander placed a finance marker against the car, on a fixed sum loan agreement the banks interest is with the client and not with the property showing it to be more like a PCP. Santander disagreed with him and said I could have Voluntary Surrendered. He wrote back saying that there was no evidence this was even discussed and is unfair as it would have left a shortfal when he believed i should have had the VT right.

We are still waiting on Santander to agree to his decision which is for them to take the car back as a VT at the point I originally asked and to refund the monies paid monthly since that date.

A long saga but I am thankful for the Ombudsman Service. This experience has taught me to even read the small print and to never trust a car dealer! Probably to never get a PCP again either! For anyone in a similar situation I hope the above helps and would welcome any comments

Mercdriver

You don't want to Voluntary Surrender -  I believe this has an effect on your credit report that you don't want.

Nearlyold

Who is it you believe misled you in this case was it the Dealer who arranged the finance for you or Santander who provided it?
Strictly a PCP is not a legally defined type of credit agreement unlike Hire Purchase, Conditional Sale or Fixed Sum/Term Loan.
A PCP can in fact be based on any of these types of agreement - which type of agreement did you think you were getting.

It's quite unusual for a finance agreement not to state the type of agreement in large print at the top of the page (typically the page with all the figures and the signature box) - the wording is usually along the lines of . This is a XXXXX agreement regulated under the XX act etc -   Sign only if you wish to be bound by the terms etc.  It's never going to state in this section that it's a PCP because there is no regulatory definition of a PCP

On the Volvo finance page it states 
Following an accepted application, Santander Consumer UK will fulfil your Purchase Plan as either a Conditional Sale Agreement or a Fixed Sum Loan Agreement.
Which of those types of agreement did the Dealer lead you to believe you were getting, it's not Santander's fault if the dealer failed to point which type of agreement you had been offered. On that note did you inform the dealership you required an agreement that had the right to VT.

DrEskimo

Exactly as above. You needed to be clear about the terms you signed before you signed them. Also voluntary surrender is very different to voluntary termination. Make sure you have not confused the two in your case with the ombudsman.

Above all else though (and I'm like a broken record on these VT threads...) Was VT even the best option for you?? Did you get a range of quotes on the cars value as a trade to any local dealers/garages? How did these compare with the settlement figure? The entire saga could be avoided if the cars value is the same as, or greater than the settlement. It is much easier to simple sell the car and the settle the finance. Be prepared to get a range of quotes though and haggle to get a good price, just as with most things you buy and sell in life. Don't just take one dealers quote and then assume that's it.

Picard91

DrEskimo said:

Above all else though (and I'm like a broken record on these VT threads...) Was VT even the best option for you??

It did seem the best option at the time. The cars value was less than the quotes I was getting to buy by about £1500 (despite doing half the mileage I had arranged in the PCP and it been in great condition). While this whole saga was going on and I just wanted rid I tried to sell it quickly to WeBuyAnyCar.. the finance marker that Santander had put on the car prevented me from doing this, despite them in their 'Fixed Sum Loan Agreement' saying the loan would be taken out against me personally and they would hold no interest in the car.

I am not quite sure how to quote more than one post but to reply to Nearlold's. It was the dealer really but as the dealership no longer exists (changed hands) and they act on behalf on Santander while selling the agreement it is Santander who are liable.
At the top of the Finance Agreement it says PCP Agreement. According to volvos website 'A Personal Contract Purchase is a flexible form of loan where some of the cost is deferred until the end of the agreement in order to provide you with the benefit of lower monthly payments. The deferred amount is known as the Optional Final Payment and is sometimes also referred to as the Guaranteed Future Value (GFV). At the end of the agreement you have three options: Retain the car, Return the car, Renew the car'

My agreement has mileage allowance, a GFV and a right to return to retain or return the car.

A Fixed Sum Loan is not available as a standard product choice. We may offer
you this product as part of our underwriting conditions. Your dealer will
make you aware of this after your application for finance has been received and assessed by us.
A fixed sum loan agreement according to Santanders website or at least in 2019 when I submitted my evidence;

'In some circumstances we may offer you a Fixed Sum Loan. Sometimes known as an
unsecured loan, this is different to an overdraft or credit card because it allows you to
borrow a  fixed amount over a  fixed term at a  fixed rate of interest. A Fixed Sum Loan
gives you immediate ownership of the car, meaning it is yours from the start of the
loan. At the end of the agreement, all of the car’s current market value could be
recouped if you decided to sell it or traded it in as a deposit against your next car.

With the above agreement if I own the car, there should be no Mileage allowance, GFV and no finance marker on the car. There was all three with my agreement. I was not made aware of a fixed sum loan either. I believe it was a standard PCP so I believe that would be a conditional sale agreement.

In the ombudsman's letter to Santander he did quote it is a most unusual agreement and not standard. It really has shown me the importance of understanding the paperwork and not to just go on what the salesman says, as mentioned I doubt I will ever be entering into a lease agreement again.

Nearlyold

You need to look at the next box down from the "Fixed Sum Loan" section on the Santander website to see the agreement you ended up with, it's called Fixed Sum Loan with "Guaranteed Final Payment*"
see - https://www.santanderconsumer.co.uk/wp-content/uploads/SCUK-Product-Guide.pdf  shame you never spotted it as it would clear up some of the confusion.

You are right it's the fault of the dealer for not pointing out the type of agreement you were offered, other than adding a finance marker in error it's not clear what Santander have done wrong.

Your agreement may have the words "PCP Agreement" somewhere in the document (after all you have got a PCP product but rather than a PCP based on a Conditional Sale or HP its based on a Fixed Sum agreement) but that won't be in the section with the regulated definition, - that will say "This is a Fixed Sum Loan agreement" because from a regulatory perspective that is the official wording for the type of agreement you have.

PCPs are also often  HP based and again in the section with the regulated definition it will only say  - This is a "Hire Purchase" agreement.

If your agreement had been a Conditional Sale based PCP the same section would have only stated This is a "Conditional Sale"  Agreement. 

The PCP phrase never appears in the regulated definition section because there is no legal definition of what a PCP is - it's a marketing phrase.

Picard91

Nearlyold said:

You need to look at the next box down from the "Fixed Sum Loan" section on the Santander website to see the agreement you ended up with, it's called Fixed Sum Loan with "Guaranteed Final Payment*"
see - https://www.santanderconsumer.co.uk/wp-content/uploads/SCUK-Product-Guide.pdf  shame you never spotted it as it would clear up some of the confusion.

You are right it's the fault of the dealer for not pointing out the type of agreement you were offered, other than adding a finance marker in error it's not clear what Santander have done wrong.

Your agreement may have the words "PCP Agreement" somewhere in the document (after all you have got a PCP product but rather than a PCP based on a Conditional Sale or HP its based on a Fixed Sum agreement) but that won't be in the section with the regulated definition, - that will say "This is a Fixed Sum Loan agreement" because from a regulatory perspective that is the official wording for the type of agreement you have.

PCPs are also often  HP based and again in the section with the regulated definition it will only say  - This is a "Hire Purchase" agreement.

If your agreement had been a Conditional Sale based PCP the same section would have only stated This is a "Conditional Sale"  Agreement. 

The PCP phrase never appears in the regulated definition section because there is no legal definition of what a PCP is - it's a marketing phrase.

Thanks for the info, good to know for the future. I wonder how many average customers know the difference between the definitions of a PCP agreement. I thought a Hire Purchase and a PCP was different? Or at least according to Volvos website they are under different categories.

Santander may have only put the finance marker on which was wrong but they should try to ensure the people who are selling their products make it abundantly clear what it is they are getting. Instead of saying well usually its this price, however I can give you a great deal where it is this price and its still a PCP....

I would have never secured this amount of money against myself instead of the car if I had of known or taken our a lease without a VT. Its not that I had the intention of using it but it is good to have that security there.

Why don't they teach this stuff in school? They really should!

DrEskimo

You are generally better off getting a personal loan without the VT compared to PCP as the amount it's costing you in additional interest is going to offset any savings from what you save by using the VT anyway.

In your example I suspect the 'PCP' with the balloon payment ended up costing you more than £1,500 in additional interest charges relative to a cheaper lower APR personal loan without a balloon payment....

Nearlyold

WPicard91 said:

Nearlyold said:

You need to look at the next box down from the "Fixed Sum Loan" section on the Santander website to see the agreement you ended up with, it's called Fixed Sum Loan with "Guaranteed Final Payment*"
see - https://www.santanderconsumer.co.uk/wp-content/uploads/SCUK-Product-Guide.pdf  shame you never spotted it as it would clear up some of the confusion.

You are right it's the fault of the dealer for not pointing out the type of agreement you were offered, other than adding a finance marker in error it's not clear what Santander have done wrong.

Your agreement may have the words "PCP Agreement" somewhere in the document (after all you have got a PCP product but rather than a PCP based on a Conditional Sale or HP its based on a Fixed Sum agreement) but that won't be in the section with the regulated definition, - that will say "This is a Fixed Sum Loan agreement" because from a regulatory perspective that is the official wording for the type of agreement you have.

PCPs are also often  HP based and again in the section with the regulated definition it will only say  - This is a "Hire Purchase" agreement.

If your agreement had been a Conditional Sale based PCP the same section would have only stated This is a "Conditional Sale"  Agreement. 

The PCP phrase never appears in the regulated definition section because there is no legal definition of what a PCP is - it's a marketing phrase.

Thanks for the info, good to know for the future. I wonder how many average customers know the difference between the definitions of a PCP agreement. I thought a Hire Purchase and a PCP was different? Or at least according to Volvos website they are under different categories.

Santander may have only put the finance marker on which was wrong but they should try to ensure the people who are selling their products make it abundantly clear what it is they are getting. Instead of saying well usually its this price, however I can give you a great deal where it is this price and its still a PCP....

I would have never secured this amount of money against myself instead of the car if I had of known or taken our a lease without a VT. Its not that I had the intention of using it but it is good to have that security there.

Why don't they teach this stuff in school? They really should!

You personally still owe the money either way whether a loan is secured "on you" or on the car.

Have you VT'd previous cars? If so that may be a reason why Santander would only offer you a Fixed Sum Loan.

A traditional straightforward HP or Conditional Sale or Fixed Sum Loan is different to a PCP, but the bits that make a finance agreement a PCP ie GMFV, Mileage Limits etc are just bolt ons to a standard HP, Conditional Sale or Fixed Sum Loan agreement.

If you look at your Fixed Sum Loan PCP docs in detail you'll see that although you own the vehicle from outset, Santander commit to giving you the option of them buying the vehicle back from you at the end of the agreement for the GMFV (subject to an excess mileage adjustment) the amount they notionally pay you for your vehicle clears the loan. You also have the option of simply paying the balance due on the loan or part exchanging and putting any equity towards a deposit on a new vehicle. It's these options that make it a PCP.

Picard91

I understand I would still owe the money however I do think its different having it secured on yourself or the car. Maybe just in my mind but it does seem different.

Not VT'd Previous cars no, I wasn't expecting to VT this one but with a job offer in a different country and been away 10 months of the year it seemed the best solution.

They really should teach this in school

Jumblebumble

Nearlyold said:

You need to look at the next box down from the "Fixed Sum Loan" section on the Santander website to see the agreement you ended up with, it's called Fixed Sum Loan with "Guaranteed Final Payment*"
see - https://www.santanderconsumer.co.uk/wp-content/uploads/SCUK-Product-Guide.pdf  shame you never spotted it as it would clear up some of the confusion.

You are right it's the fault of the dealer for not pointing out the type of agreement you were offered, other than adding a finance marker in error it's not clear what Santander have done wrong.

Your agreement may have the words "PCP Agreement" somewhere in the document (after all you have got a PCP product but rather than a PCP based on a Conditional Sale or HP its based on a Fixed Sum agreement) but that won't be in the section with the regulated definition, - that will say "This is a Fixed Sum Loan agreement" because from a regulatory perspective that is the official wording for the type of agreement you have.

PCPs are also often  HP based and again in the section with the regulated definition it will only say  - This is a "Hire Purchase" agreement.

If your agreement had been a Conditional Sale based PCP the same section would have only stated This is a "Conditional Sale"  Agreement. 

The PCP phrase never appears in the regulated definition section because there is no legal definition of what a PCP is - it's a marketing phrase.

Santander have claimed that the car belongs to the OP from the start but have then put a finance marker on a car that does not belong to them and the loan is unsecured
This is totally unacceptable 
Seems like Santander are just as confused as the OP.