A PCP car finance commission claim is a claim for financial redress where a dealer received undisclosed commission from a lender to set the consumer's interest rate higher than it would otherwise have been. The claim quantifies the overpaid interest and calculates what the consumer is owed.
What is a PCP car finance commission claim?
A PCP car finance commission claim is a legal claim arising from a dealer receiving undisclosed commission from a lender in exchange for setting the consumer's interest rate above the minimum the lender would have accepted. The consumer paid more over the life of their agreement than they should have, and the claim seeks recovery of the financial loss, plus in some cases the full amount of the commission itself.
PCP stands for Personal Contract Purchase, a form of motor finance under which the consumer pays monthly instalments and at the end of the term has the option to purchase the vehicle outright, return it, or use any equity as a deposit on a new agreement. PCP was the dominant motor finance product in the UK in the decade before the FCA ban, accounting for roughly 80% of all new car finance written by volume. The FCA estimates that tens of millions of individual agreements written between 2007 and January 2021 may have involved commission-related rate manipulation.
The legal basis for these claims was sharpened by the Court of Appeal's decision in Johnson v FirstRand Bank (T/A Motonovo Finance) in October 2024. The court held that discretionary commission arrangements created a conflict of interest between the dealer and the consumer, and that non-disclosure of those arrangements was sufficient to give consumers equitable remedies including rescission or recovery of the commission as a bribe. The FCA has opened a formal review into historical motor finance commission practices and is expected to announce an industry-wide redress scheme framework in 2025.
Key Ledgers supports PCP and consumer finance commission claims by producing the forensic accounting evidence that underpins quantum: how much commission was paid, how much the interest rate was inflated, and what the consumer overpaid as a direct result.
What was a discretionary commission arrangement (DCA) and why was it banned?
[CONTENT_IMAGE_1]A discretionary commission arrangement was a structure under which the dealer or broker had discretion to set the consumer's interest rate anywhere within a band permitted by the lender, and the commission they received was linked directly to the rate they chose. The higher the rate, the more commission the dealer earned. Dealers therefore had a direct financial incentive to charge consumers the maximum rate the lender would allow rather than the rate that best served the consumer.
The FCA banned DCAs in January 2021 after concluding that they led to consumers paying significantly more than they would have under a fixed-fee or flat-rate commission model. According to the FCA's own analysis at the time, consumers paid on average £1,100 more over a four-year agreement under a DCA than under a fixed-fee arrangement. Across tens of millions of affected agreements, the aggregate consumer loss runs into billions of pounds.
The legal problem is not that commission was paid to the dealer. Lenders routinely pay commission to dealers and that alone does not create liability. The problem is that the commission was undisclosed and was structured so that the dealer's financial interest in receiving higher commission directly conflicted with the consumer's interest in obtaining a lower rate. The Court of Appeal in 2024 found that this conflict created an obligation to disclose, and that failure to disclose was sufficient for equitable remedies to arise even without proof of actual dishonesty on the dealer's part.
Not every motor finance agreement is affected. Fixed-fee commission arrangements, where the dealer received the same payment regardless of the rate applied, do not give rise to the same conflict. Agreements written after January 2021 fall outside the scope of DCA claims because the ban removed the incentive structure entirely. The relevant question for each agreement is whether a DCA was in place and, if so, what rate uplift was applied by the dealer.
How is the redress figure calculated in a PCP commission claim?
[CONTENT_IMAGE_2]The redress figure in a PCP commission claim is the financial loss caused by the inflated interest rate. A forensic accountant calculates it by comparing what the consumer paid under their actual agreement with what they would have paid under a counterfactual rate, that is, the lowest rate the lender would have offered on this type of agreement absent the commission-driven uplift.
The reconstruction uses three inputs: the original finance agreement (financed amount, APR, payment schedule, total amount payable), the lender's commission records for the specific agreement (commission rate and corresponding rate uplift), and the lender's minimum or buy-rate for agreements of this type at the relevant time. The forensic accountant recalculates the full amortisation schedule under the counterfactual rate and compares the total cost to the consumer against what they actually paid.
| Metric | DCA rate (12.9% APR) | Minimum rate (8.9% APR) |
|---|---|---|
| Monthly payment | £393 | £371 |
| Total amount payable | £18,864 | £17,808 |
| Total interest paid | £3,864 | £2,808 |
| Consumer overpaid | £1,056 | |
These figures are illustrative. The actual loss on any individual claim depends on the financed amount, the APR applied, the specific commission structure used by the lender, and the minimum rate available at the time of the agreement. Where the consumer also seeks disgorgement of the commission paid to the dealer, the forensic accountant quantifies that figure separately from the lender's records.
The counterfactual rate is often the most contested element of the quantum calculation. Lenders may argue that the minimum rate applicable to a specific consumer was higher than the general buy-rate because of credit profile or risk band. A forensic accountant addresses this by analysing the lender's rate schedules for the relevant period, the consumer's credit band at the time, and the range of rates the lender actually applied to comparable agreements.
What evidence does a forensic accountant need for a PCP commission claim?
[CONTENT_IMAGE_3]The evidence required for a PCP commission quantum analysis falls into three categories: the original finance agreement, the lender's commission records for that specific agreement, and the applicable minimum or buy-rate for comparable agreements at the relevant time.
The original finance agreement is typically recoverable from the consumer's own records or via a Subject Access Request to the lender under UK GDPR. It contains the agreement number, financed amount, contractual APR, monthly payment schedule, and total amount payable. These are the baseline figures for the actual-position calculation.
Commission records are held by the lender and show the commission rate paid to the dealer and, in a DCA structure, the corresponding interest rate uplift applied to this agreement. They may be obtained through the FCA's review process, through pre-action disclosure, or from the lender's response to a Subject Access Request. Some lenders have begun disclosing commission data proactively as part of their FCA review obligations. Where commission records are not yet available, the forensic accountant can often reconstruct the likely commission from the observed rate uplift and industry-standard commission table data for the period.
The minimum or buy-rate is the most contested piece of evidence in many claims because it defines the counterfactual floor. Some lenders have disclosed their historical rate schedules as part of the FCA review. Where they have not, the forensic accountant may produce an expert opinion on the applicable rate based on the lender's published rate data, market comparisons for the period, and the consumer's credit profile and risk band at the time.
In practice, forensic accountants are often instructed before all three categories of evidence are available. A well-constructed expert report identifies what evidence has been obtained, what remains outstanding, and what assumptions have been applied in the interim, with clear confirmation of how the figures will be updated once the outstanding records are produced.
How do forensic accountants support PCP group litigation?
Group litigation in PCP commission claims involves large numbers of claimants pursuing claims against one or more lenders through a Group Litigation Order or a representative action. Forensic accountants support group litigation at two levels: methodology development for common issues, and individual quantum calculation for each claimant within the group.
At the methodology level, the forensic accountant develops a standard framework for calculating the loss on each agreement. This framework defines how the counterfactual rate is determined, how the finance schedule is reconstructed, and how the overpaid interest is quantified. In most group litigation cases the methodology is either agreed between the parties' experts before trial or settled by the court as a common issue before individual quantum assessments begin.
At the individual level, each claimant requires a separate quantum schedule calculated from their specific agreement, commission records, and the applicable minimum rate. Where the group includes hundreds or thousands of claimants, the forensic accountant applies the agreed methodology systematically across the full dataset, producing individual schedules for each claimant and an aggregate summary of the total redress pool for the group.
Key Ledgers has direct experience in volume consumer finance claims and can produce both methodology reports for common issues hearings and individual quantum schedules for large claimant groups. For broader context on how financial loss is quantified in complex civil claims, see our article on how business interruption insurance claims are calculated.
What does a PCP forensic accounting report contain?
A forensic accounting report for a PCP commission claim is a structured expert document setting out the expert's instructions, methodology, findings, and opinion on quantum. Where the claim proceeds to court, the report must comply with CPR Part 35 and the Practice Direction on Expert Evidence.
A complete PCP forensic accounting report contains:
- A summary of instructions, identifying who instructed the expert and what questions they have been asked to address
- A list of documents reviewed, covering the finance agreement, commission records, lender rate schedules, and any other materials used in the analysis
- A description of methodology, explaining how the counterfactual rate was determined and how the overpaid interest was calculated
- The quantum schedule, a worked calculation showing actual payments, counterfactual payments, and the difference representing the financial loss
- An opinion on quantum, expressed clearly and in terms a court can apply directly at a quantum hearing
- A statement of truth confirming the expert understands their overriding duty to the court and that the report complies with CPR Part 35
Where the claim also seeks disgorgement of commission, the report includes a separate schedule quantifying the commission paid to the dealer and an analysis of how that commission was structured within the finance agreement.
If you are a solicitor or claims management firm with PCP or motor finance commission files, contact Key Ledgers to discuss a forensic accounting instruction on quantum.
Frequently asked questions about PCP commission claims
Does every PCP agreement qualify for a commission claim?
No. Only agreements involving a discretionary commission arrangement fall within the scope of current claims. Fixed-fee commission agreements, where the dealer received the same payment regardless of the interest rate applied, do not carry the same conflict of interest. Agreements written after January 2021 are also excluded because the FCA ban removed the DCA structure from that date.
Do I need a forensic accountant as well as a solicitor for a PCP claim?
Yes. Solicitors advise on the legal basis for the claim and manage the litigation. Forensic accountants calculate the financial loss figure. Both are required: the court needs a quantified loss figure to make an award, and that analysis must come from a forensic accountant instructed as an expert witness, not from the solicitor's own team.
How does the FCA review affect individual PCP claims already in litigation?
The FCA review is a regulatory process separate from individual litigation. The FCA has power to impose an industry-wide redress scheme, which could affect how and when individual claims settle. Solicitors handling individual claims should monitor the review timeline closely because a regulatory scheme may offer a faster resolution route than litigation in some cases, though the two processes are not mutually exclusive.
Written by the Key Ledgers forensic accounting team. Key Ledgers provides forensic accounting and expert witness services in financial disputes across England and Wales, including consumer finance quantum, business interruption claims, and complex commercial litigation support.
Sources: FCA Motor Finance Review policy statement (PS19/20) and interim findings; Court of Appeal judgments in Johnson v FirstRand Bank and related cases (October 2024); FCA CP23/18 motor finance commission disclosure guidance.