If you financed a vehicle using a hire purchase (HP) agreement, you might be owed compensation. Recent investigations reveal widespread mis-selling, with lenders failing to disclose commission structures and unfair terms. On average, affected customers receive £1,600 in refunds and interest after making a claim.
How Were Hire Purchase Agreements Mis-Sold?
Many finance providers used discretionary commission models, leading to higher interest rates for consumers. Some lenders failed to explain commission arrangements or misrepresented terms. This practice resulted in inflated repayment amounts, making it a clear case of financial mis-selling.
Who Can Claim Compensation?
You may be eligible for compensation if:
- Your lender did not disclose commissions paid to brokers or dealerships.
- Your total loan cost exceeded standard market rates without justification.
- You were pressured into accepting terms without a fair explanation.
- You received misleading information about repayment terms or interest charges.
How Much Can You Get Back?
The average payout is £1,600, but individual claims vary based on loan amount, interest paid, and evidence of mis-selling. Some cases result in refunds exceeding £2,500 when lenders applied excessively high interest rates.
Steps to Claim Your Compensation
- Gather Documentation: Locate your original hire purchase agreement, loan statements, and any communication from your lender.
- Check Your Loan Terms: Review whether commission structures were hidden or if interest rates seemed unusually high.
- Contact Your Lender: Request an official breakdown of your loan agreement and commission details.
- Submit a Complaint: If your lender refuses to refund, escalate your case to the Financial Ombudsman Service (FOS).
- Consider Professional Help: Claims management firms can assist but often charge fees. Always check their terms before proceeding.
What If Your Lender Refuses to Pay?
Some lenders, like Close Brothers, have already processed refunds for affected customers. If your lender refuses to acknowledge wrongdoing, the Financial Ombudsman Service can intervene. In 2023 alone, thousands of claims were upheld, forcing financial institutions to compensate consumers.
Final Thoughts
If you suspect your hire purchase agreement was mis-sold, act now. Compensation claims are time-sensitive, and delays could impact your refund eligibility. The process can be straightforward if you follow the right steps and provide clear evidence. Don’t let lenders profit from unfair practices—check your agreement today and claim what’s rightfully yours.
