Car dealers are being warned to be especially sensitive to customer needs when selling PCP products in September, as figures from the Financial Ombudsman Service revealed an 18% rise in hire purchase complaints (including PCP deals) in 2014.

In total, 1,784 complaints were handled by the service and the majority of these related to the purchase of a vehicle.

Of these, 37% were found in the consumer’s favour.

“It’s worth remembering that people are often more focused on the thrill of buying a new car and can lose sight of the small print,” said Caroline Wells, head of outreach at the ombudsman.

“When making a sale we’d urge all dealers to make sure customers know what they are signing up to and to keep records of what was discussed. That means that if problems crop up down the line, they can be sorted out easily.

And Paul Harrison, head of motor finance at Auto Trader and formerly head of motor finance at the Finance and Leasing Association, said: “Retailers are looking forward to a bumper September market and it’s important that we help them make the most of the opportunities, but also to navigate a path away from potential problems.

“While the increase in finance complaints is perhaps unsurprising given the overall increase in car finance sales, it is encouraging to see that the ombudsman often rules in favour of the industry.

“We’ve worked with the ombudsman to create a check list of new and used car finance dos and don’ts to help retailers avoid consumer complaints and manage them if they do arise.

Often issues stem from a simple lack of clarity or communication at the point of sale.

Tips from Auto Trader and the ombudsman include the following:

         If a consumer is buying under a finance agreement, take the time to thoroughly explain how the product works. A salesman may think that the number of monthly payments, the interest rate or the fact that a ‘balloon payment’ may be required at the end of the agreement are obvious. But taking the extra time to draw this to the consumer’s attention could avoid any disagreements further down the line

         Sometimes, consumers who have bought a car on finance may run into difficulty making the repayments. This would be something that they need to speak to the finance company about directly but, should a customer approach you, be helpful. If you’re able to find the right person or number at the finance company then some simple signposting can help the person reach a resolution much more quickly

         A used car may have some wear and tear when it’s sold. But if a consumer contacts you to complain, taking the time to clearly explain the difference between fair wear and tear and mechanical defects improves transparency between the two parties. Often complaints happen because consumers and dealers are not clear with each other. Investigating any problems thoroughly and with the right evidence will go a long way to resolve it –simply relying on the fact that the car was “sold as seen” is unlikely to carry much weight, particularly if a complaint is reviewed by the ombudsman

         If you have a vehicle provenance certificate or anything else to show the history and quality of the car, don’t wait for the customer to ask for it. Offer it to them. Customers may not always know about these, so offering this level of service could help reassure them. Some retailers are opening displaying provenance information alongside vehicles being advertised on their website which can only help build trust.

Proportion of private car sales funded through PCPs. Source: Finance & Leasing Association

	2012	2013	2014
New car sales	64%	70%	73%
Used car sales		26%	33%