Reclaim a refund on mis-sold hire purchase (HP) car finance
Hire purchase (HP) is one of the most common ways to buy a car: you pay in instalments and own it after the final payment. Like PCP, many HP deals arranged through a dealer or broker carried a commission the lender paid them, and often the broker could nudge your interest rate up to earn more, a discretionary commission arrangement. If that was never properly explained, your credit relationship may have been unfair and you could be owed money. You can complain directly and for free, and you keep every penny of any refund.
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Hire purchase is regulated credit under the Consumer Credit Act 1974. Sections 140A-140C let a court (and the Financial Ombudsman) decide that the relationship was unfair, for example because of an undisclosed commission, and order redress. The FCA's consumer redress scheme (policy statement PS26/3) covers motor finance agreements, including HP, taken out between 6 April 2007 and 1 November 2024. The pause on complaint handling lifts on 31 May 2026, and you can escalate for free to the Financial Ombudsman Service if the lender rejects you.
Step by step
- 1Find your HP agreement and confirm the lender, the broker or dealer, the APR, the term and the dates, and that it falls between 6 April 2007 and 1 November 2024.
- 2Write to the lender named on the agreement to complain that commission paid to the broker was not properly disclosed, making the relationship unfair under sections 140A-140C of the Consumer Credit Act 1974.
- 3Request that they confirm the commission type and amount and refund any overpaid interest plus compensatory interest, and ask them to log it under the FCA motor finance redress scheme.
- 4If they reject it or miss the deadline, refer your complaint to the Financial Ombudsman Service for free, normally within six months of their final response.
What they'll say, and your comeback
“Hire purchase is different from PCP, so the commission rules do not apply to you.”
Comeback, Both HP and PCP are regulated motor finance under the Consumer Credit Act 1974 and both are covered by the FCA redress scheme. The issue is the undisclosed commission, not the label on the product.
“You have already paid off the car, so there is nothing to reclaim.”
Comeback, Settling the agreement does not remove my right to redress for an unfair relationship. The complaint is about commission I was overcharged through, and that is reclaimable whether the agreement is live or finished.
FAQ
What is the difference between a discretionary and a non-discretionary commission claim?
A discretionary commission arrangement let the broker increase your interest rate to earn more; the FCA banned these on 28 January 2021. Even non-discretionary commissions can be reclaimable if they were high and not properly disclosed, as in the Johnson v FirstRand Supreme Court case. Complain either way and let the lender check.
What evidence do I need?
Your finance agreement is the main thing. If you cannot find it, your lender should provide a copy on request. You do not need to prove the commission amount yourself; the lender holds that information.
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A self-serve tool, not a law firm. General information, not legal advice.