PCPs and consumer risk

  28 July 2019

Do new car PCPs need to be investigated by the FCA? Probably not. Will they be investigated by the FCA? Maybe.

There’s been rising chatter about buying (and selling) cars on PCP agreements for a few months now and this week Cap said something that was obvious to anyone who sells them, but absolutely needed to be pointed out to a wider audience. Of course customers aren’t exposed to the negative equity (if there is some) which is good news for them. But if customers are expecting equity and there isn’t any, that’s when there’s an issue.

A PCP deal probably won’t have been mis-sold because the paperwork on any finance agreement has to be very clear. However, customers – particularly repeat PCP customers – may be used to having equity in their car so they can use that as a deposit for the next new thing.

If the depreciation is such that there’s no equity left in the deal, and there’s no manufacturer pot of money to subsidise the next deal, that’s when car buyers get angry and complain.

Right or wrong doesn’t really come in to this situation.

Don’t underestimate consumers’ ability to make a fuss – usually via the national newspapers – who will then claim there’s an issue because that’s what sells papers.

And when the nationals start regularly writing about the negative aspects of PCPs, no matter if they’ve been sold correctly, then you can almost guarantee the FCA will start sniffing around.

Watch this space.


Tristan Young

Editorial director

Auto Retail Network

Start your free 14 day trial

Get free access to our Bulletin, Agenda & Profit for 14 days.

After 14 days we will auto bill your credit or debit card unless the order is cancelled.

    As an auto retail executive you need insightful and unique industry intelligence to boost your business potential. Here’s a taste of what Auto Retail Network has to offer:

    • Get informed and boost your business potential
    • More than 1,200 fellow executives have joined us
      since launch
    • Independent, carefully crafted, unique content relevant to you and your business
    • Develop a greater awareness of market trends and opportunities
    • Access to a wide range of materials whenever, wherever and however you want it
    • Significant discounts on ARN events, reports and
      other publications