The tidal wave of stories linked to overly depreciating cars continues, as news stories in the weekend papershighlighted that popular PCP agreement might soon be the target of an FCA investigation.

The popularity of these ‘deals’ is evident to see, just a few years ago, every TV commercial for a new car, told the audience the OTR (on the road) price, how much actual cash they needed in their pocket to drive the car away; today I cannot remember an advert that said anything other than the monthly payment price; proof positive that PCP (personal contract plan) is today the stand-out most popular way of buying a new car; at nearly seven in ten.

So why is the FCA (financial conduct authority) so interested?

They (the FCA) regulate the seller and make sure the buyer has not been duped. Jumping in, most usually, when complaints are made; well they are being made! Moreover, in some not too inconsiderable numbers; 5,805 from March 17 to March 18, up by over 4,000 from 2014, it is clear that PCP customers are unhappy.

What then is the complaint?

Majoritively it is mis-selling. Most PCP’s are relatively complicated affairs, all involving jargon and numbers, and many of the complaints; especially those being upheld by the FCA are those where customers have not had the deal thoroughly explained to them.

Although there is now a growing group of complaints, those who have been forced into a negative equity cul-de-sac and can’t either turn round or reverse out, until recently, it was typical for the balloon payment (final payment at the end of the PCP agreement) to be less than the value of the car, so customers could trade in their vehicle and use the profit as a down-payment on a new car. This helped the popularity of PCPs.

However, as we all know; used car values have fallen. So, many customers are now discovering the final payment required exceeds the car's value. Left with a tough decision, they either hand back the car and have no vehicle to drive – or no deposit for a new one – or overpay to keep it. Not exactly the dream scenario.

In days gone by the depreciation was overegged and the GFV (guaranteed future value) of the car quoted for PCP was underplayed, to allow for a returning customer to stay ‘in-brand’ by having a healthy deposit for a new car, however, used prices and specifically diesel-depreciation have put an end to this.

Many customers are now faced with a big issue, that being that even at the end of their ‘carefully’ planned deal period their vehicle’s used price is nowhere near the value of the final payment, hence the negative equity, this is not necessarily bad selling or even mis-selling, but something that could have been stopped or adjusted.

This is a bigger more involved story than just PCP. Manufacturers named and shamed in the diesel-emissions-cheating scandal, either as bona-fide miscreants or those who used marketing-spin to deflect from the discrepancy between lab tests and real driving Euro 5 compliance, need to stand up and be counted, or more importantly show their customers they care.

For example; if you bought a Mercedes-Benz diesel just before the scandal broke, the likelihood of you being in the negative equity abyss is high, the price your vehicle is worth will be nowhere near the used car valuation, you might feel aggrieved, will hearing from Mercedes that “Since real-world driving conditions do not generally reflect those in the laboratory, the consumption figures may differ from the standardised figures.” (Guardian News Paper 05.10.15)

Make you feel better? I doubt it.