The Smart #1 was commonly sold on Personal Contract Purchase (PCP) and Hire Purchase (HP) finance agreements during the Financial Conduct Authority's (FCA) investigation period, which ran from 6 April 2007 to 1 November 2024. The FCA found that many PCP and HP agreements were made under discretionary commission arrangements, raising concerns about potential mis-selling practices in the motor finance industry. ## How the Smart #1 was Typically Financed When purchasing a Smart #1 on PCP or HP terms, customers typically financed amounts ranging from £15,000 to £30,000. The most common term lengths for these agreements were 36 to 48 months, with many deals featuring balloon payments at the end of the agreement period. Common lenders providing finance for Smart #1 vehicles included Black Horse, Barclays Partner Finance, Close Brothers Motor Finance, MotoNovo Finance, and Santander Consumer Finance. In a PCP agreement, customers make monthly payments and have the option to buy the vehicle outright or return it at the end of the term, with any outstanding balance covered by a Guaranteed Minimum Future Value (GMFV). HP agreements typically involve higher monthly payments without the balloon payment or GMFV option. Both types of agreements often include various fees such as arrangement fees, early settlement charges, and mileage excess penalties. ## The FCA Motor Finance Investigation The FCA launched an investigation into discretionary commission arrangements in motor finance after receiving numerous complaints about potential mis-selling practices. These investigations revealed that many customers were misled or unfairly treated when entering into PCP and HP agreements. According to the FCA's findings, 12.1 million eligible agreements (FCA, March 2026) across the UK were potentially affected by these issues (FCA, March 2026).2 billion in losses (FCA estimate). The investigation focused on how dealerships and lenders compensated sales staff through discretionary commissions based on finance deals rather than car sales alone. ## How to Check Your Agreement Look for any mention of discretionary commission arrangements or terms that seem unusual compared to standard financing practices. Key dates to consider are from 6 April 2007 to 1 November 2024. check if your agreement includes a term labelled "Discretionary Commission Arrangement" (DCA). This is an important indicator of whether the finance deal was potentially mis-sold due to sales practices incentivised by commission structures. If you find any suspicious terms or arrangements in your contract, it's advisable to seek legal advice from a professional solicitor. ## How to Complain Directly to Your Lender for Free If you believe your Smart #1 finance agreement has been affected by the FCA investigation, you can complain directly to your lender at no cost. Common lenders for Smart #1 vehicles include Black Horse, Barclays Partner Finance, Close Brothers Motor Finance, MotoNovo Finance, and Santander Consumer Finance. When contacting your lender, clearly explain any concerns regarding mis-selling practices or unfair terms in your finance agreement. It's important to gather all relevant documentation and evidence before initiating the complaint process. You do not need a claims management company to handle this; you can file the complaint yourself for free directly with your lender. ## Sources and References - Financial Conduct Authority (FCA). "Motor Finance: Discretionary Commission Arrangements." FCA, 2024. - Office for National Statistics (ONS) Census. "Population Estimates," 2021.