DCA Loophole

MoneyGeoff

I had PCP finance in 2013, it was not a DCA. However, when I bought the car I had asked for a HP quote as I didn’t want PCP and the total cost of HP was less. They emailed me a HP quote and I agreed to it and arranged a visit to sign paperwork. Once there, they offered me £500 to take PCP. This made the PCP offer cheaper than HP in terms of total cost so I went with that instead. The dealer didn’t tell me that they received more commission for PCP than HP.

This practice is still allowed so unlikely to be included in the FCA compensation decision. I see a lot of people are asking their finance company if their deal was a DCA and being told it was not DCA. I think it’s worth asking also, “did the dealer received more commission from this deal compared to HP or other deals that were available to me”. There may be another scandal in the near future.

MyRealNameToo

MoneyGeoff said:

I had PCP finance in 2013, it was not a DCA. However, when I bought the car I had asked for a HP quote as I didn’t want PCP and the total cost of HP was less. They emailed me a HP quote and I agreed to it and arranged a visit to sign paperwork. Once there, they offered me £500 to take PCP. This made the PCP offer cheaper than HP in terms of total cost so I went with that instead. The dealer didn’t tell me that they received more commission for PCP than HP.

This practice is still allowed so unlikely to be included in the FCA compensation decision. I see a lot of people are asking their finance company if their deal was a DCA and being told it was not DCA. I think it’s worth asking also, “did the dealer received more commission from this deal compared to HP or other deals that were available to me”. There may be another scandal in the near future.

PCP is a marketing term for HP with a balloon, hence the header on PCP contract is "HIRE PURCHASE AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974"


So let me get this straight, you want to complain that the dealer saved you money because they also made a little bit more at the same time by structuring your HP deal slightly differently? Most would call that a win win situation not something to complain about. 

MoneyGeoff

MyRealNameToo said:

PCP is a marketing term for HP with a balloon, hence the header on PCP contract is "HIRE PURCHASE AGREEMENT REGULATED BY THE CONSUMER CREDIT ACT 1974"


So let me get this straight, you want to complain that the dealer saved you money because they also made a little bit more at the same time by structuring your HP deal slightly differently? Most would call that a win win situation not something to complain about. 

I never said I wanted to complain or claim anything. I have not made a complaint. I am simply advising others that whilst they are in the process of emailing one question, they may as well ask the second question at the same time.

You have entirely missed the point of the scandal. The issue isn’t whether PCP = HP with a balloon or whether you saved money — it’s that the dealer had a financial incentive they didn’t disclose, which is exactly the core of the DCA scandal.

In law, undisclosed commission = potential mis-selling, regardless of whether the deal looked “good” for you at the time. The fact you saved money doesn’t erase the duty to disclose conflicts of interest.

If this were mortgages or insurance, that omission would already be a regulatory breach. Car finance has just lagged behind.

dunstonh

You have entirely missed the point of the scandal. The issue isn’t whether PCP = HP with a balloon or whether you saved money — it’s that the dealer had a financial incentive they didn’t disclose, which is exactly the core of the DCA scandal.

The lenders won the court case on commission as long as it was not excessive.  
Bad DCA is where the lenders loaded in the interest rate to earn more commission.     Good DCA is where they didn't make any changes or lowered the commission to reduce the rate.