PCP motor finance could be the subject of the next mis-selling scandal if sales executives haven’t been clear at the point of purchase, warns The National Association of Commercial Finance Brokers.

It believes claims lawyers have turned their focus to the consumer finance industry now that PPI mis-selling cases are drying up, and it suggests PCP may be at risk.

And it has accused franchised dealers and captive finance companies of giving insufficient advice on PCP interest structure and likely equity.

Graham Hill, board member and car finance expert, NACFB, said: “If the PPI claims lawyers conclude there is enough basis to put forward a mis-selling case on PCPs then, given the huge volumes in which these products have been sold to both private individuals and businesses, the car finance industry could be shaken to its roots.

“While the PCP in itself can be an appropriate solution for many car owners, as it reduces the monthly payments quite significantly, the issue lies with the way these products have been sold.

“Were people made aware of the increased interest rate charges on PCPs relative to hire purchase agreements, and were they misled about the prospect of equity, either deliberately or out of dealer naivety?”

“In the majority of cases, I suspect ignorance and confusion among dealers is to blame. But this will not help them and the finance providers behind them if, in the months ahead, PCPs are judged to have been mis-sold.”