Terms and Conditions for Host Car Finance

I. Introduction

HOST CAR FINANCE are credit brokers and not lenders. This document outlines the essential terms and conditions for Host Car Finance, a trading style of Host Finance Ltd, governing its relationship with customers for all car finance products. The aim is to establish a framework that ensures transparency, fairness, and robust compliance with the pertinent regulatory landscape in the United Kingdom.

A. Purpose and Scope of these Terms and Conditions

These Terms and Conditions (T&Cs) define the contractual relationship between Host Car Finance and its valued customers. They are designed to provide clear, comprehensive information regarding the rights and obligations of both parties throughout the duration of any car finance agreement. The document underscores Host Car Finance’s unwavering commitment to operating with integrity, adhering to the highest standards of consumer protection, and fostering an environment where customers can make well-informed financial decisions. These T&Cs serve as the foundational legal document for all car finance transactions facilitated by Host Car Finance.

B. About Host Car Finance (trading style of Host Finance Ltd)

Host Car Finance operates as a trading style of Host Finance Ltd, a company duly registered in England and Wales. The company’s registered address and full contact details are provided within the formal agreement documentation. Host Finance Ltd is authorized and regulated by the Financial Conduct Authority (FCA), holding a specific FCA firm reference number, which can be verified on the Financial Services Register. This regulatory oversight ensures that Host Car Finance adheres to strict operational and conduct standards designed to protect consumers.

C. Regulatory Framework (FCA, CCA 1974, UK GDPR)

Host Car Finance operates within a stringent regulatory framework in the UK, primarily governed by the Financial Conduct Authority (FCA), the Consumer Credit Act 1974 (CCA), and the UK General Data Protection Regulation (UK GDPR).

 

The Financial Conduct Authority (FCA) plays a pivotal role in regulating consumer credit activities, ensuring that firms treat customers fairly and operate with integrity. Key FCA Handbooks relevant to car finance include the Consumer Credit Sourcebook (CONC), which sets out rules for responsible lending and pre-contractual information, and the Dispute Resolution: Complaints Sourcebook (DISP), which governs complaints handling procedures. Central to the FCA’s regulatory approach is the Consumer Duty, which mandates that firms “act to deliver Good Outcomes for retail customers,” “act in good faith,” “avoid causing foreseeable harm,” and “enable and support retail customers to pursue their financial objectives”.

 

The Consumer Credit Act 1974 (CCA) is a cornerstone of UK consumer protection legislation, regulating credit agreements and ensuring transparency in lending practices. The CCA defines regulated agreements, establishes cancellation rights (including a 14-day cooling-off period), governs early settlement procedures, and provides for voluntary termination rights.

 

The UK General Data Protection Regulation (UK GDPR) dictates how personal data must be processed, emphasizing principles such as lawfulness, fairness, transparency, purpose limitation, data minimisation, accuracy, storage limitation, integrity, and confidentiality. Host Car Finance is committed to upholding these principles in all its data handling practices.

 

A critical aspect of operating within this environment is recognising the deep interconnectedness of these regulatory requirements. While seemingly distinct, the FCA’s mandates for fair treatment and clear, upfront information under CONC directly align with the CCA’s transparency requirements in credit agreements and the UK GDPR’s foundational principle of lawful, fair, and transparent data processing. For instance, a failure to provide clear information as required by CONC could be construed as mis-selling, potentially leading to an “unfair relationship” under the CCA, and simultaneously a breach of transparency principles under GDPR concerning how customer data is utilized to offer potentially opaque products. Conversely, robust adherence to clear language standards for FCA compliance can simultaneously enhance transparency for GDPR purposes. This necessitates that Host Car Finance adopts a holistic compliance strategy, where policies and procedures are designed with an understanding of how each regulation’s requirements reinforce or depend on others. This integrated approach is essential for comprehensive risk mitigation.

II. Types of Car Finance Agreements Offered

Host Car Finance offers a range of car finance products designed to meet diverse customer needs. Understanding the distinctions between these options is crucial for customers to select the most suitable product.

A. Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) is a popular and flexible car finance option. It involves an initial deposit, followed by fixed monthly payments over an agreed term. Crucially, these monthly payments primarily cover the vehicle’s depreciation during the agreement period, not its full purchase price. Ownership of the vehicle remains with Host Car Finance throughout the agreement term. At the end of the contract, a significant portion of the vehicle’s value is deferred as an optional final lump sum, often referred to as a Guaranteed Future Value (GFV) or balloon payment. This structure provides flexibility, allowing customers to choose whether to pay the GFV and keep the car, return the car, or use any equity to renew for a new vehicle.

B. Hire Purchase (HP)

Hire Purchase (HP) is a straightforward finance agreement where the customer effectively hires the vehicle and pays for it in instalments over a fixed period. Unlike PCP, the intention with HP is for the customer to eventually own the vehicle. However, legal ownership of the vehicle remains with Host Car Finance until the very last payment, including any option-to-purchase fees, has been made. During the agreement, customers are generally not permitted to sell or dispose of the vehicle without the lender’s permission.

C. Personal Loan for Vehicle Purchase

A personal loan for vehicle purchase differs fundamentally from other finance products as it involves borrowing a sum of money to buy the car outright. This means the customer takes legal ownership of the vehicle from day one. The loan is then repaid directly to Host Car Finance, with interest, over an agreed period through fixed monthly instalments. This option is often favoured by customers who prefer outright ownership and do not intend to change cars frequently.

D. Lease Agreements (Personal Contract Hire – PCH)

Personal Contract Hire (PCH), commonly known as leasing, is a long-term rental agreement. Under a PCH agreement, the customer never acquires ownership of the vehicle. The arrangement typically involves an initial rental payment followed by fixed monthly rental payments for a set term. At the end of the lease period, the vehicle is simply returned to Host Car Finance. This option is appealing to customers who wish to drive new vehicles regularly without the responsibilities of ownership or the need for a final payment.

E. Key Differences and Customer Suitability

The various car finance products offered by Host Car Finance cater to different customer preferences and financial situations. Distinguishing between these options is paramount for informed decision-making. For instance, PCP contracts are often perceived as complex, and customers may mistakenly believe they are entering into a Hire Purchase agreement or will automatically own the vehicle at the end of the term. This lack of clarity can lead to complaints regarding costs or contractual terms. The FCA’s Consumer Duty emphasizes “consumer understanding” and requires a “clear explanation of products” by brokers and agents. Therefore, Host Car Finance recognizes that merely providing information is insufficient; the firm must ensure customers genuinely comprehend the terms. This commitment to proactive clarity helps mitigate future mis-selling claims and aligns with the Consumer Duty’s principle of “avoiding foreseeable harm.” To facilitate this understanding, the following table provides a high-level comparison of the key features of each product:

Product Type	Ownership (During Agreement)	Ownership (End of Agreement)	Initial Deposit	Monthly Payments	Final Payment (e.g., GFV/Balloon)	End-of-Agreement Options	Mileage Restrictions	VAT on Monthly Payments	Secured against Asset	CCA 1974 Coverage
Personal Contract Purchase (PCP)	Lender	Optional (via GFV)	Required	Fixed	Yes (GFV/Balloon)	Keep, Return, Part-exchange for new vehicle	Yes	No	Yes	Yes
Hire Purchase (HP)	Lender	Yes (after final payment)	Required	Fixed	No	Own vehicle	No	No	Yes	Yes
Personal Loan	Customer	Customer	Optional	Fixed	No	Own vehicle	No	No	No	Yes
Lease (PCH)	Lessor	No	Required	Fixed	No	Return vehicle, Start new lease	Yes	Yes	No	No

This comparison table serves as a valuable tool for Host Car Finance, acting as a concise summary for internal teams (e.g., sales, compliance) and a crucial visual aid for customers during the pre-contractual information stage. By explicitly outlining the differences, it supports the “clear explanation of products” expectation of the FCA and proactively addresses potential misunderstandings, thereby reducing future complaints related to product suitability and contractual terms.

III. General Terms Applicable to All Agreements

This section outlines the fundamental terms that apply universally across all car finance products offered by Host Car Finance, ensuring a consistent and compliant approach.

A. Eligibility and Application Process

To be eligible for car finance with Host Car Finance, applicants must meet general criteria, including being at least 18 years of age and a resident of the United Kingdom. The application process typically involves the submission of personal and financial information, which is then subject to a thorough credit assessment. This assessment helps Host Car Finance determine the applicant’s suitability for the requested finance product.

B. Pre-Contract Information and Adequacy of Explanation (FCA CONC 4.2)

Host Car Finance is committed to providing clear, comprehensive, and timely pre-contractual information to all customers. Before any agreement is signed, customers will receive all necessary information in a durable medium, such as paper or email. This information will detail the nature of the agreement, the total cost of credit, the Annual Percentage Rate (APR), the full payment schedule, and any associated fees.

 

Beyond mere disclosure, Host Car Finance adheres to the “adequacy of explanation” requirement under FCA CONC 4.2.5R. This means that the firm will provide an explanation sufficient to enable the customer to assess whether the agreement aligns with their needs and financial situation. This explanation will cover the key features of the agreement, including any aspects that might have a significant adverse effect on the customer in an unforeseen way, and the principal consequences of failing to make payments, such as default charges, impaired credit rating, or potential repossession. Customers will be given ample opportunity to ask questions about the agreement and to take away the information for review. The firm recognizes that simply providing a document is not enough; it is crucial to ensure genuine customer comprehension. The FCA has previously cautioned against relying on “have read and understood” declarations if they do not reflect actual understanding. The Consumer Duty further reinforces this with its “consumer understanding” outcome.

Therefore, Host Car Finance aims to implement practical measures to verify customer understanding, such as using plain language, simplifying complex terms, and making information easily digestible. This proactive approach to comprehension helps mitigate future disputes arising from misunderstandings.

C. Creditworthiness and Affordability Assessment (FCA CONC 5.2A)

Host Car Finance undertakes a rigorous assessment of each customer’s creditworthiness and affordability before entering into any regulated credit agreement or significantly increasing the amount of credit provided. This assessment is designed to ensure that the customer can realistically make repayments throughout the life of the agreement without experiencing undue financial hardship, resorting to further borrowing, or failing to meet other contractual or statutory obligations.

 

The assessment is based on sufficient information obtained directly from the customer and, where necessary, from credit reference agencies. This involves evaluating the customer’s income, non-discretionary expenditure, and other financial commitments. A key aspect of this process is that the affordability assessment considers not just the customer’s current financial snapshot but also reasonably foreseeable reductions in income or increases in non-discretionary expenditure over the agreement’s term. This forward-looking evaluation of financial resilience is critical, as inadequate affordability checks are a common source of mis-selling complaints. Host Car Finance’s commitment to this thorough, dynamic assessment aligns with the Consumer Duty’s principle of “avoiding foreseeable harm” by preventing customers from entering into unaffordable agreements.

 

The following table summarizes key FCA CONC and DISP requirements, along with UK GDPR principles, which underpin Host Car Finance’s operations:

Requirement Area	FCA/UK GDPR Reference	Key Obligation
Responsible Lending	CONC 5.2A	Conduct thorough creditworthiness and affordability assessments, considering current and foreseeable financial circumstances.
Pre-Contractual Information	CONC 4.2	Provide clear, adequate explanations of agreement terms, costs, and risks, ensuring customer understanding.
Fair Treatment of Consumers	CONC 2.1 (Principles for Businesses)	Act in good faith, avoid foreseeable harm, and enable customers to pursue financial objectives.
Complaint Handling	DISP 1.3, DISP 2.8	Establish effective, transparent, and prompt complaint procedures, with clear timelines and FOS referral pathways.
Data Protection	UK GDPR Article 5 (Principles)	Process personal data lawfully, fairly, transparently, with purpose limitation, data minimisation, accuracy, storage limitation, integrity, confidentiality, and accountability.

 

This table serves as a concise compliance summary, mapping critical operational areas to specific regulatory requirements. It reinforces Host Car Finance’s commitment to robust compliance and demonstrates how the T&Cs are designed to meet regulatory expectations, thereby mitigating legal and reputational risks.

D. Pricing, Fees, and Charges (Transparency)

Host Car Finance ensures complete transparency regarding all pricing, fees, and charges associated with its finance products. The Annual Percentage Rate (APR), along with any other applicable fees, will be clearly disclosed upfront to the customer. This includes, but is not limited to, administration fees, late payment charges, early settlement fees, option to purchase fees (for HP), excess mileage charges (for PCP and PCH), and charges for damage beyond fair wear and tear. Host Car Finance maintains a strict policy of having no hidden charges.

 

A significant source of customer complaints relates to a lack of clarity on costs, particularly “surprise” charges for extra miles or disproportionate charges for damages. Historically, undisclosed commissions also contributed to customer detriment. The FCA’s Consumer Duty, through its “fair value” outcome, explicitly requires consideration of “all charges and fees payable over the lifetime of the product” and “any contingency fees or charges”. To address this, Host Car Finance’s T&Cs not only list all potential fees but also provide clear, prominent explanations of how these fees are calculated and the specific circumstances under which they apply. Providing illustrative examples of how contingent charges can accumulate can help prevent future “surprises” and aligns with the “avoiding foreseeable harm” principle of the Consumer Duty.

E. Payment Terms and Schedule

The finance agreement will clearly specify the agreed monthly payment amount, the exact due dates for each payment, and the accepted payment methods. Customers are responsible for ensuring that payments are made on time. The T&Cs will outline the consequences of late or missed payments, which may include additional charges and a potential adverse impact on the customer’s credit score.

F. Early Settlement and Voluntary Termination (CCA 1974)

Customers have the right to settle their finance agreement early by requesting an “early settlement figure” from the lender. This figure will be calculated using the “Actuarial method,” which ensures that customers receive a fair rebate of unearned interest charges. This method means that while each monthly payment is fixed, the proportion of interest decreases over time, and the capital repayment increases. The Lender commits to providing this settlement figure within seven days of a written request, and the figure will be valid for 28 days.

 

The “Rule of 78” is another method for calculating early settlement rebates, but it is explicitly noted to have significant downsides, as it front-loads interest, meaning a greater amount of interest is paid in the early stages of the loan. This can result in customers owing more than anticipated if they repay early, effectively penalising early repayment. This potential for consumer detriment directly conflicts with the FCA’s Consumer Duty principles of “fair value” and “avoiding foreseeable harm”. Host Car Finance recommended lenders use of the Actuarial method aligns with best practices for consumer fairness and transparency in early settlement calculations, mitigating the risk of unexpected costs for customers.

 

Furthermore, customers benefit from the right to Voluntary Termination (VT) under the Consumer Credit Act 1974. This right, often referred to as the “Halves Rule,” allows customers to terminate their Hire Purchase or Conditional Sale agreement and return the vehicle once they have paid at least 50% of the total amount payable under the agreement, provided the vehicle is returned in a reasonable condition for its age and mileage. It is important to note that VT rights do not apply to Lease (Personal Contract Hire) agreements.

G. Default and Repossession Procedures (CCA 1974)

In the event of a payment default, the lender will follow a defined procedure in accordance with the Consumer Credit Act 1974. This process typically involves issuing a “default notice” to the customer, which specifies the nature of the breach, the action required to remedy it, and a minimum period (usually 14 days) for the customer to rectify the situation. The lender will only pursue repossession of the vehicle after serving a valid default notice and adhering to all legal requirements. If more than one-third of the total amount payable under the agreement has been paid, a court order is generally required for repossession. The lenders T&Cs will clearly outline the consequences of default, which may include repossession of the vehicle and a negative impact on the customer’s credit score.

 

Beyond the legal minimums, Host Car Finance is committed to supporting customers who experience financial difficulties. The firm recognises that financial pressure can have a significant impact on a person’s well-being. The lender’s T&Cs will encourage customers to proactively contact the lender if they anticipate payment issues, detailing available hardship options such as deferred payments, changes to payment due dates, or reduced payment plans. By outlining these support mechanisms, Host Car Finance demonstrates a proactive approach to preventing foreseeable harm and fostering a more supportive customer relationship, aligning with the Consumer Duty’s “consumer support” outcome.

H. Customer’s Rights and Responsibilities

Customers engaging with Host Car Finance have several key rights, including the right to clear and transparent information, fair treatment throughout the agreement, the right to cancel within a 14-day cooling-off period, the right to a clear breakdown of repayment information, and the right to make a complaint if they feel they have been treated unfairly.

In return, customers have responsibilities, which include making timely payments as per the agreement, maintaining the vehicle in accordance with the agreed terms, securing appropriate insurance coverage, and providing accurate and truthful information during the application and throughout the agreement term.

I. Lender’s Rights and Responsibilities

The lender, has the right to receive timely payments as stipulated in the agreement. In cases of unrectified default, and subject to legal conditions, the firm reserves the right to repossess the vehicle. The lender may also retain the right to inspect the vehicle to ensure compliance with maintenance and condition clauses.

 

Correspondingly, Host Car Finance and the lender bears significant responsibilities. These include ensuring fair treatment of all customers, providing clear and comprehensive explanations of all products and their associated terms, conducting proper and thorough affordability checks, offering an accessible and straightforward complaints process, and rigorously protecting customer data in accordance with privacy laws.

J. Assignment of Agreement

The lender may reserve the right to assign or transfer its rights and obligations under the finance agreement to another party. This is a standard clause in credit agreements. The T&Cs will explicitly state that any such assignment or transfer will not negatively impact the customer’s existing rights or obligations under the agreement.

 

The transfer of a credit agreement has direct implications for the customer, particularly concerning personal data. The new lender or assignee becomes a “controller” of the customer’s personal data, triggering specific GDPR obligations. If not handled transparently and securely, this could lead to customer confusion, service disruption, or even data breaches. Therefore, the lender may ensure that any assignment of the agreement will maintain the same level of customer service and protection. All data protection obligations, including secure data transfer and any necessary notification requirements under GDPR, are be adhered to. This clause reassures customers that their relationship with the lender and data privacy will remain safeguarded even if the agreement changes hands.

IV. Specific Terms for Each Finance Product

Building upon the general terms, this section details the unique provisions applicable to each specific car finance product offered by Host Car Finance.

A. Personal Contract Purchase (PCP)

1. Deposit and Monthly Payments

For PCP agreements, the initial deposit and subsequent fixed monthly payments are calculated based on several factors, including the vehicle’s purchase price, the agreed term of the agreement, and the estimated annual mileage. These payments cover the vehicle’s depreciation over the contract period.

2. Guaranteed Future Value (GFV) / Balloon Payment

A key characteristic of PCP is the Guaranteed Future Value (GFV), also known as the balloon payment. This is an optional final lump sum payment that represents the deferred portion of the vehicle’s cost at the end of the agreement term. This amount is estimated at the outset of the contract, based on the vehicle type and anticipated mileage.

3. End of Agreement Options (Keep, Return, Renew)

At the conclusion of a PCP agreement, customers have three distinct options:

• Keep the Vehicle: The customer can pay the optional GFV, and upon receipt of this payment, ownership of the vehicle will transfer to them.
• Return the Vehicle: The customer can return the vehicle to Host Car Finance. Provided the vehicle is in good condition (allowing for fair wear and tear) and the agreed mileage limits have not been exceeded, there will be nothing further to pay.
• Renew Your Vehicle: The customer can part-exchange their current vehicle. Any equity (where the vehicle’s market value exceeds the GFV) can be used as a deposit towards a new finance agreement.

4. Mileage Restrictions and Excess Mileage Charges

PCP agreements include an agreed annual mileage limit. Exceeding this limit will incur an excess mileage charge, calculated on a per-mile basis as specified in the agreement. These charges are designed to reflect the additional depreciation caused by higher mileage.

5. Fair Wear and Tear Policy

If the customer chooses to return the vehicle at the end of the PCP agreement, its condition will be assessed against Host Car Finance’s Fair Wear and Tear Guidelines. These guidelines (detailed in Section V.B) outline what constitutes acceptable deterioration from normal use, and charges may apply for damage beyond these standards.

A significant number of complaints regarding PCP agreements arise from unexpected balloon payment amounts or “surprise” charges for excess mileage and damages. This indicates that initial disclosure, while mandated by CONC 4.2, may not always translate into sustained customer understanding over the long term of the agreement. This can lead to “foreseeable harm” at the contract’s conclusion. To mitigate this, Host Car Finance commits to proactive, periodic communication with PCP customers throughout the agreement term. This includes sending annual statements detailing current mileage against the agreed allowance, providing reminders of the GFV, and offering accessible links to the fair wear and tear guide. This continuous engagement helps manage customer expectations, reinforces their understanding of obligations and options, and significantly reduces the likelihood of unexpected charges at the end of the term, thereby aligning with the Consumer Duty’s emphasis on ongoing customer support and preventing foreseeable harm.

B. Hire Purchase (HP)

1. Ownership Transfer

Under an HP agreement, legal ownership of the vehicle remains with Host Car Finance until all scheduled payments, including the final option-to-purchase fee, have been successfully made. Only upon receipt of the final payment does ownership transfer to the customer.

2. Voluntary Termination (Halves Rule)

Customers retain the right to voluntarily terminate their HP agreement under the Consumer Credit Act 1974. This allows the customer to return the vehicle once at least 50% of the total amount payable under the agreement has been paid, provided the vehicle is in reasonable condition.

3. Maintenance and Vehicle Condition

Customers are responsible for maintaining the vehicle in good working order and in accordance with the manufacturer’s recommendations throughout the HP agreement term. This ensures the vehicle’s longevity and preserves its value.

C. Personal Loan for Vehicle Purchase

1. Ownership from Day One

With a personal loan for vehicle purchase, the customer gains full legal ownership of the vehicle immediately upon its purchase. The loan is unsecured against the vehicle itself.

2. Loan Repayment Structure

The loan is repaid through fixed monthly instalments of capital and interest over the agreed term directly to Host Car Finance. The customer is responsible for all aspects of vehicle maintenance, insurance, and road tax.

D. Lease Agreements (Personal Contract Hire)

1. No Ownership Option

A fundamental characteristic of a Lease Agreement (Personal Contract Hire) is that the customer will never own the vehicle. The agreement is purely a long-term rental arrangement.

2. Initial Rental and Monthly Payments

Lease agreements typically require an upfront initial rental payment, followed by a series of fixed monthly rental payments over the agreed lease term.

3. Mileage and Fair Wear and Tear

Lease agreements include a specified annual mileage limit. Exceeding this limit will result in excess mileage charges, as detailed in the agreement. Upon return of the vehicle at the end of the lease, its condition will be assessed against Host Car Finance’s Fair Wear and Tear Guidelines (see Section V.B), and charges may apply for damage beyond these standards.

4. Return Conditions

At the end of the lease term, the customer must return the vehicle to Host Car Finance in the condition specified in the agreement, accounting for fair wear and tear, and within the agreed mileage limits.

V. Vehicle Maintenance, Condition, and Insurance

This section details the customer’s obligations regarding the care, condition, and protection of the financed vehicle.

A. Customer’s Maintenance Obligations

Customers are responsible for ensuring that the financed vehicle is regularly maintained in accordance with the manufacturer’s recommendations and service schedules throughout the agreement term. This includes routine servicing, MOT tests (where applicable for longer lease terms), and addressing any necessary repairs to keep the vehicle in a safe and roadworthy condition. Host Car Finance may offer optional maintenance packages that cover servicing, replacement tyres, and other repair costs for an additional fixed monthly fee. It is important to note that such maintenance packages typically do not cover repairs resulting from accidental damage.

B. Fair Wear and Tear Guidelines

“Fair wear and tear” refers to the acceptable level of deterioration that occurs from normal use of a vehicle over the agreement term. This is distinct from damage caused by neglect, abuse, or accident. If a vehicle is returned to Host Car Finance (as is the case with PCP and Lease agreements), its condition will be assessed against industry-standard guidelines, such as those published by the British Vehicle Rental and Leasing Association (BVRLA).

These guidelines provide objective criteria for assessing vehicle condition. Examples of acceptable wear include minor scuffs and scratches (e.g., up to 25mm not penetrating primer), small areas of chipping, and normal wear to interior carpets. Unacceptable damage, which may incur charges, includes rust, obvious evidence of poor repair, dents over 10mm, cracks in glass, or tyres not meeting legal tread depth requirements. The T&Cs will clearly state that charges may apply for damage exceeding fair wear and tear standards or for missing items like keys.

The issue of “disproportionate charges for damages” is a common complaint , often stemming from subjective interpretations of “fair wear and tear” at the end of an agreement. The adoption and clear communication of standardized guidelines, such as those from the BVRLA, are crucial for Host Car Finance. This standardization helps reduce ambiguity and potential disputes. Host Car Finance is committed to providing customers with an accessible copy of these detailed guidelines at the outset of the agreement, alongside explanations of the inspection process and illustrative examples of acceptable versus unacceptable damage. This proactive communication aligns with the Consumer Duty’s principle of “consumer understanding” and “avoiding foreseeable harm” by setting clear expectations and minimizing future disagreements.

C. Mandatory Insurance Requirements (Comprehensive Coverage)

It is a legal requirement in the UK for any vehicle owner or driver to have valid car insurance, unless the vehicle is officially registered as off the road (SORN). For all financed vehicles, Host Car Finance typically requires the customer to maintain fully comprehensive car insurance throughout the entire agreement term. This requirement is in place to protect the financial interests of both the customer and Host Car Finance, as the firm often retains legal ownership or a significant financial interest in the vehicle until the loan is fully repaid.

Comprehensive insurance offers the highest level of protection, typically covering accidental damage to the customer’s own car, theft, fire damage, and liability for injuries or damage to third parties, regardless of fault. This extensive coverage ensures that the vehicle is adequately protected against a wide range of risks.

D. Risk of Loss or Damage and GAP Insurance

The customer bears the primary risk of loss or damage to the vehicle throughout the agreement term. In the unfortunate event of a total loss (e.g., the vehicle being written off due to an accident or stolen), the customer remains liable for the outstanding finance balance. It is important to understand that a standard comprehensive insurance payout is typically based on the vehicle’s market value at the time of the incident, which may be less than the outstanding finance balance due to depreciation. This potential “shortfall” can leave the customer in a difficult financial position, owing money on a vehicle they no longer possess.

To mitigate this significant foreseeable financial harm to the customer, Host Car Finance strongly advises customers to consider obtaining GAP (Guaranteed Asset Protection) insurance. GAP insurance is designed to cover the difference between the insurance payout (market value) and the outstanding finance balance in the event of a total loss. This recommendation demonstrates Host Car Finance’s commitment to “avoiding foreseeable harm” and enabling customers to “pursue their financial objectives” by addressing a known financial risk. The T&Cs will include clear information about GAP insurance, encouraging customers to assess its suitability for their individual circumstances.

VI. Complaints Handling Procedure

Host Car Finance is committed to resolving customer complaints fairly, efficiently, and transparently, in strict adherence to the Financial Conduct Authority’s (FCA) Dispute Resolution: Complaints Sourcebook (DISP) rules.

A. Internal Complaints Process (FCA DISP 1.3)

Host Car Finance is dedicated to providing an accessible and straightforward complaints process for all customers. A complaint is defined as “Any oral or written expression of dissatisfaction… about the provision of, or failure to provide, a financial service… which alleges that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience”. Customers can submit a complaint through various reasonable means, including by phone, email, or post, and it is confirmed that making a complaint will incur no charge.

Upon receipt, all complaints will be acknowledged promptly, ideally within 48 working hours, and no later than five working days. The internal investigation process involves a thorough assessment of the complaint, gathering all relevant information and documentation, and impartially evaluating the circumstances from the customer’s perspective. To ensure impartiality, any employee who is the subject of a complaint will not be involved in its handling. Host Car Finance commits to maintaining constant communication with the complainant throughout the investigation, providing updates at least once a week.

A fundamental aspect of Host Car Finance’s complaints handling is the commitment to performing root cause analysis. FCA DISP 1.3.3R mandates firms to “identify and remedy any recurring or systemic problems” by “analysing the causes of individual complaints so as to identify root causes common to types of complaint”. This approach shifts the focus from merely resolving individual complaints to utilizing them as valuable data points for continuous improvement. This directly supports the Consumer Duty’s requirement to “understand and evidence how Good Outcomes are being met” and to “be proactive in acting where customers aren’t getting good outcomes”. Host Car Finance’s T&Cs will explicitly state this commitment to analysing complaint trends and using these insights to enhance its products, services, and communications. This demonstrates a proactive, learning-oriented approach to consumer protection and regulatory compliance, moving beyond reactive problem-solving to systemic risk mitigation, and signalling to customers that their feedback genuinely contributes to better outcomes for all.

B. Escalation Procedures and Timelines (FCA DISP 2.8)

Host Car Finance adheres to strict timelines for complaint resolution:

• Summary Resolution: If a complaint can be investigated and resolved within three business days, a summary resolution communication will be issued to the customer.
• Final Response: For complaints requiring more extensive investigation (beyond three days), a detailed Final Response letter will be issued within eight weeks of receiving the complaint. This response will include comprehensive information about the complaint, the investigation findings, and the proposed resolution.
• Holding Letter: In the event that a final response cannot be provided within the eight-week timeframe, a holding letter will be sent to the customer before the deadline. This letter will explain the reason for the delay, provide an updated timeframe for when a final response can be expected, and inform the customer of their right to refer the complaint to the Financial Ombudsman Service (FOS).

 

The FCA DISP rules are very specific about communication during the complaints process, particularly regarding delays. The requirement for a clear holding letter, detailing the reason for delay, a new timeframe, and FOS referral rights, is not merely procedural; it is a critical element of managing customer expectations and maintaining trust, especially when customers may already be frustrated. Poor communication during delays can exacerbate dissatisfaction and lead to further complaints. Host Car Finance’s T&Cs will explicitly detail these communication commitments, including the precise timelines and the information provided in holding letters. This transparency reinforces the company’s adherence to regulatory standards and demonstrates a commitment to “fair treatment” and “consumer support” even when internal processes face challenges, preventing complaints from escalating solely due to a perceived lack of communication or transparency about the process.

The following table summarizes the key timelines for complaints handling:

Action	Timeline
Acknowledge Complaint	Within 48 working hours (target) / 5 working days (maximum)
Summary Resolution	Within 3 business days
Final Response	Within 8 weeks
Holding Letter (if no Final Response in 8 weeks)	Issued before 8-week deadline
FOS Referral (from Final Response)	Within 6 months
FOS Referral (from event/awareness)	Within 6 years of event / 3 years of awareness

This table provides a quick, clear reference for both customers and internal staff regarding the expected timelines for complaint resolution and escalation to the FOS. It directly addresses the FCA DISP rules, ensuring that Host Car Finance communicates these critical timeframes accurately and consistently. This transparency is vital for managing customer expectations and demonstrating compliance with regulatory obligations.

C. Financial Ombudsman Service (FOS) Referral

If a customer remains dissatisfied with Host Car Finance’s final response, or if eight weeks have passed without receiving a final response, they have the right to refer their complaint to the Financial Ombudsman Service (FOS). The FOS is an independent body established to resolve disputes between consumers and financial firms fairly and impartially.

Customers must refer their complaint to the FOS within six months of the date on which Host Car Finance issued its final response or summary resolution communication. There are also broader time limits: complaints generally cannot be considered by the FOS more than six years after the event complained of, or (if later) three years from the date on which the complainant became aware (or ought reasonably to have become aware) that they had cause for complaint. Host Car Finance will provide the FOS contact details and an explanatory leaflet with its final response letters. Customers are not required to pay a third party, such as a Claims Management Company, to represent them when approaching the FOS.

The motor finance industry has faced scrutiny over historical issues, particularly concerning Discretionary Commission Arrangements (DCAs), which were banned by the FCA in 2021 due to their potential for mis-selling. While Host Car Finance operates with full transparency regarding commission structures, in line with current FCA regulations and the ban on DCAs, acknowledging past industry issues can build significant consumer trust. Host Car Finance’s T&Cs will proactively address the firm’s commitment to transparent commission structures and responsible lending practices. This demonstrates a proactive adherence to evolving regulatory standards and the Consumer Duty, reassuring customers of the firm’s ethical stance.

D. Common Complaint Types and Resolution Approaches (Affordability, Mis-selling, Vehicle Condition)

Host Car Finance recognises that common complaint categories in car finance include concerns about a lack of clarity on costs or contract terms, inadequate affordability checks, issues with faulty or unsatisfactory vehicles, and historical concerns related to undisclosed commission arrangements. Host Car Finance is committed to investigating each complaint thoroughly and impartially. For issues related to clarity or mis-selling, the firm will review its pre-contractual disclosures and affordability assessments to ensure compliance and fairness. For vehicle condition complaints, the firm will liaise with the vehicle seller (as the primary liable party) and assess the matter in accordance with relevant consumer rights legislation. Appropriate remedial action or redress will be determined on an individual basis, taking into account all aspects of the complaint and any suffering caused to the customer.

VII. Data Protection and Privacy (UK GDPR)

Host Car Finance is committed to protecting the personal data of its customers in strict compliance with the UK General Data Protection Regulation (UK GDPR).

A. Principles of Data Processing (Lawfulness, Fairness, Transparency, Data Minimisation, Accuracy, Storage Limitation, Integrity, Confidentiality)

Host Car Finance processes all personal data in accordance with the seven core principles of UK GDPR :

• Lawfulness, Fairness, and Transparency: Personal data is processed lawfully, fairly, and in a transparent manner in relation to the data subject. Customers are clearly informed about how their data is collected and used.
• Purpose Limitation: Data is collected for specified, explicit, and legitimate purposes, such as processing finance applications, managing agreements, and fulfilling regulatory obligations. It is not further processed in a manner incompatible with those purposes.
• Data Minimisation: Host Car Finance collects and processes only the personal data that is adequate, relevant, and limited to what is necessary for the stated purposes.
• Accuracy: Host Car Finance takes every reasonable step to ensure that personal data is accurate and, where necessary, kept up to date. Inaccurate data is erased or rectified without delay.
• Storage Limitation: Personal data is kept in a form that permits identification of data subjects for no longer than is necessary for the purposes for which it is processed.
• Integrity and Confidentiality: Personal data is processed in a manner that ensures appropriate security, including protection against unauthorized or unlawful processing and against accidental loss, destruction, or damage, using appropriate technical or organizational measures.
• Accountability: Host Car Finance, as the data controller, is responsible for, and able to demonstrate compliance with, these principles.

A critical and often overlooked area of GDPR compliance in car finance relates to personal data stored within the vehicle itself. Vehicles can retain sensitive personal information such as phone contacts, call logs, home addresses, and navigation history. When a vehicle is returned to Host Car Finance’s physical or financial control, the firm becomes a “controller” of this data and has a mandatory duty to safeguard and delete this personal data before the vehicle is re-leased or sold to a new user. This represents a significant GDPR risk if not properly managed. Therefore, Host Car Finance’s T&Cs will include a specific, prominent clause addressing the handling of personal data stored on vehicle systems. This clause will outline the customer’s responsibility to delete their personal data before returning the vehicle and will state Host Car Finance’s commitment to implementing processes to ensure the deletion or anonymization of such data before the vehicle is re-leased or sold. This demonstrates proactive compliance with a complex and critical aspect of GDPR, mitigating potential breaches and associated legal and reputational damage.

The following table summarizes the UK GDPR principles for data processing:

Principle	Explanation for Host Car Finance
Lawfulness, Fairness, and Transparency	Process data legally, ethically, and openly, clearly informing customers about data use.
Purpose Limitation	Collect data only for specific, explicit purposes (e.g., finance application, agreement management) and do not use it for incompatible purposes.
Data Minimisation	Collect and process only the personal data that is strictly necessary for the intended purpose.
Accuracy	Ensure customer data is accurate, complete, and kept up-to-date.
Storage Limitation	Retain personal data only for as long as is necessary to fulfil the purposes for which it was collected.
Integrity and Confidentiality	Implement robust technical and organizational measures to protect data from unauthorized access, loss, or damage.
Accountability	Be responsible for, and able to demonstrate compliance with, all GDPR principles.

This table provides a clear and concise summary of the fundamental UK GDPR principles. It serves as an internal guide for Host Car Finance’s data handling practices, ensuring that all aspects of data processing, from collection to retention and security, are aligned with these core legal requirements. For customers, it offers a transparent overview of how their data rights are protected, building trust and demonstrating Host Car Finance’s commitment to data privacy.

B. Data Controller and Processor Roles

Host Car Finance acts as the Data Controller for the personal data it collects from customers. This means the firm determines the purposes and means of processing that data. Where third parties (such as credit reference agencies, vehicle inspection companies, or IT service providers) process personal data on Host Car Finance’s behalf, they will act as Data Processors. Host Car Finance ensures that legally binding contracts are in place with all such processors, obligating them to comply with GDPR requirements and process data only on Host Car Finance’s instructions.

C. Customer Rights (Access, Rectification, Erasure)

Under UK GDPR, customers have several fundamental rights concerning their personal data:

• Right to Access: Customers have the right to request copies of the personal data Host Car Finance holds about them.
• Right to Rectification: Customers can request the correction of inaccurate or incomplete personal data.
• Right to Erasure (Right to be Forgotten): Customers have the right to request the deletion of their personal data under certain conditions, such as when the data is no longer necessary for the purposes for which it was collected.
• Right to Restrict Processing: Customers can request the limitation of the processing of their personal data in certain circumstances.
• Right to Object to Processing: Customers have the right to object to the processing of their personal data in certain situations, including for direct marketing purposes.

D. Data Security and Breach Reporting

Host Car Finance implements robust technical and organizational measures to ensure the security of personal data and protect it from unauthorized access, loss, destruction, or damage. In the unfortunate event of a data breach, Host Car Finance has established procedures for prompt and effective response. This includes notifying the Information Commissioner’s Office (ICO) within 72 hours of becoming aware of the breach, where required, and communicating the breach to affected individuals if it poses a high risk to their rights and freedoms.

VIII. Miscellaneous Legal Clauses

This section contains standard legal clauses that ensure the robustness and enforceability of the finance agreement.

A. Governing Law and Jurisdiction (English Law)

The finance agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English Law. The parties agree to submit to the exclusive jurisdiction of the English courts for the resolution of any disputes arising from or related to the agreement.

 

It is important to note that while parties generally have the freedom to choose a governing law, for consumer contracts, this choice cannot diminish or override any mandatory statutory rights a consumer would otherwise have under their domestic laws. This is a critical safeguard for consumers, preventing firms from using a foreign legal framework to circumvent stronger local consumer protection laws. Therefore, Host Car Finance’s T&Cs explicitly state that the choice of English law will not diminish or override any mandatory statutory rights a consumer may have under UK consumer protection legislation, such as the Consumer Credit Act 1974 or the Consumer Rights Act 2015. This demonstrates a commitment to consumer fairness and legal compliance that goes beyond a mere boilerplate clause.

B. Severability

If any provision or part-provision of these Terms and Conditions is found by a court or administrative body of competent jurisdiction to be invalid, illegal, or unenforceable, that provision shall be deemed deleted to the extent of its invalidity, illegality, or unenforceability. The remaining provisions of these T&Cs will remain in full force and effect. The parties will use all reasonable endeavours to replace the invalid, illegal, or unenforceable provision with a valid, legal, and enforceable substitute provision that achieves, as closely as possible, the intended commercial result of the original provision.

C. Entire Agreement

These Terms and Conditions, together with specific agreement/s signed by the customer, constitute the entire agreement between Host Car Finance and the customer. This supersedes and extinguishes all prior discussions, correspondence, negotiations, promises, assurances, warranties, representations, and understandings between them, whether written or oral, relating to its subject matter. The customer acknowledges that in entering into this agreement, they have not relied on any statement, representation, assurance, or warranty that is not set out in these T&Cs or the finance agreement.

D. Force Majeure

Host Car Finance shall not be liable for any failure or delay in performing its obligations under these Terms and Conditions where such failure or delay results from any event beyond its reasonable control (a “Force Majeure Event”). Such events may include, but are not limited to, acts of God, war, natural disasters, epidemics, pandemics, government actions, or significant disruptions to essential services. In the event of a Force Majeure Event, Host Car Finance will notify the customer promptly and take reasonable steps to mitigate its impact.

E. Notices

Any notice or other communication given to a party under or in connection with these Terms and Conditions shall be in writing and sent by pre-paid first-class post or other next working day delivery service, or by email, to the address or email address specified in the finance agreement or as otherwise notified by the recipient party. Any notice sent by post shall be deemed to have been received at the time at which it would be delivered in the ordinary course of post. Any notice sent by email shall be deemed to have been received at the time of transmission, provided no automated delivery failure notification is received.

F. Amendments

Any amendment or variation to these Terms and Conditions shall only be effective if it is in writing and signed by or on behalf of both Host Car Finance and the customer.

IX. Conclusion

Host Car Finance is dedicated to providing transparent, fair, and compliant car finance solutions. These Terms and Conditions reflect the firm’s commitment to operating within the robust regulatory framework of the UK, particularly under the guidance of the Financial Conduct Authority (FCA), the Consumer Credit Act 1974, and the UK General Data Protection Regulation. The firm’s approach is fundamentally shaped by the FCA’s Consumer Duty, which is not merely a set of rules but an overarching principle aiming for a “cultural shift” in financial services. This requires Host Car Finance to “act to deliver good outcomes for retail customers” and to “place the customer at the heart of their decision-making”. Consequently, these T&Cs are designed not just as a legal document but as a clear articulation of Host Car Finance’s ethical and operational commitment to its customers.

 

Host Car Finance continuously monitors customer outcomes, proactively identifies and remediates issues (informed by systematic root cause analysis of complaints), and adapts its products and processes to ensure fair value, consumer understanding, and effective support. This includes providing clear, comprehensive pre-contractual information, conducting rigorous and forward-looking affordability assessments, ensuring absolute transparency on all costs (including contingent charges), and offering proactive support to customers facing financial difficulties. The firm also recognises the evolving landscape of data privacy, particularly concerning vehicle-stored data, and commits to robust measures to protect customer information.

 

By embedding these principles into its operations and clearly communicating them through these Terms and Conditions, Host Car Finance aims to build enduring trust with its customers, mitigate foreseeable harm, and contribute to a more transparent and consumer-centric financial market. These T&Cs represent a dynamic commitment to continuous improvement, ensuring that Host Car Finance remains a responsible and reliable partner in car finance.