Is PCP really a problem? The FLA respond

Wednesday, November 7, 2018 - 09:05
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FLAYesterday we ran an article that looked at the possibility that Personal Contract Purchase (PCP) could have been miss-sold; similar to the banking and insurance scandal of PPI.

Andrea Kinnear, Head of Communications at the Finance & Leasing Association (FLA) argues that in fact PCP has been sold on the whole, honestly and transparently, and to consumers with the highest credit scores.

Here is Andrea’s response in full: “Regarding the article, I wouldn’t champion one motor finance product by criticising another. The best product will always be the one that suits the customer’s individual circumstances.

“For those people who eventually want to own their car outright, HP would be a good choice. For those who have already moved away from the traditional sense of ownership to one where keys-in-pocket and car-on-the-drive is more important than name-on-title, PCH would be a good option – especially if they want to change cars regularly.

“But for those in the middle who are not ready to lease but not exactly wed to ownership, PCP has the flexibility they need – and that’s why it’s popular.

“This might change in future if the direction of travel away from outright ownership continues, but for now flexibility is king. And of course both HP and PCP have more consumer protections – including the right to terminate the agreement if their circumstances change, and the benefit of more information provisions.

“As for the remarks about PPI, I think the facts are slightly different. The FCA’s Motor Finance Update in March was broadly positive – mentioning that contracts are generally transparent, and that most of the growth in our market has been to consumers with the highest credit scores.

“The industry has also been investing heavily in dealership staff training for the last 11 years. As well as ‘SAF Expert’, the longstanding online test that more than 35,000 dealers take every year,  there’ll soon be a basic option, ‘SAF Essentials’, for those just starting out. With some additional reading after the Expert course, users will be ready for ‘SAF Academy’, then it’s ‘SAF Advanced’ – the CertAutoFS professional qualification. There’s even an apprenticeship to ensure that those entering the industry through different avenues will be well equipped to get the right product to the right customer.

“On that subject, the motor finance sector doesn’t attract many complaints. The number lodged with the Financial Ombudsman is very small. In fact, so small that the FOS doesn’t even have a category for PCP, or motor finance generally. It’s in among HP, but HP is used for all manner of goods including fridges and furniture – and the FOS doesn’t note whether the complaint is about the finance product itself or a satisfactory quality dispute.”