Millions of motorists could soon discover whether they are entitled to compensation over allegations of car finance mis-selling, with a crucial Supreme Court verdict expected this week.
The Court of Appeal determined in October 2024 that motor finance customers must be explicitly informed about commission payments and give their consent – failing which any commission paid to dealers would be deemed unlawful.
The automotive finance companies involved – Close Brothers and Motonovo – subsequently challenged this ruling in the Supreme Court.
Should the Supreme Court uphold the original Court of Appeal decision this week, it could mean individuals who previously secured vehicle financing may be entitled to compensation.
Nevertheless, the exact amount owed and precisely who would receive payouts remains uncertain – although lenders have already set aside billions of pounds in anticipation of potential claims, reports the Mirror.
Consumer rights specialists, including Martin Lewis, have also cautioned that politicians might intervene to overturn the decision.
The Supreme Court will deliver its verdict this Friday, August 1.
There’s also a separate motor finance probe by the Financial Conduct Authority (FCA) – launched prior to the Court of Appeal ruling – which focuses specifically on “discretionary commission agreements” (DCA).
DCAs permitted dealers and brokers to boost their earnings by imposing higher charges on customers through elevated interest rates. Despite being outlawed in 2021, the Financial Conduct Authority (FCA) initiated an investigation in January 2024 to ascertain whether customers might be entitled to compensation.
The outcome of this FCA probe has been postponed pending a Supreme Court ruling.
According to Martin Lewis’s website, even if the Supreme Court overturns the Court of Appeal’s decision, it is probable that the DCA claims will proceed via the regulator.
MoneySavingExpert.com has previously encouraged anyone who believes they may have been impacted to lodge a complaint immediately, in case a cut-off date for complaints is implemented retrospectively.
It is advised to direct your complaint to the lender who provided the car finance, not the broker or car dealer from whom you purchased your vehicle.
You could potentially qualify for compensation if you were not informed about commission and may have overpaid for your car finance, or if your car finance agreement included a DCA. MSE has a free car finance tool to help you complain.
Car finance lenders have until December 4, 2025 to respond to complaints – but it is always better to submit your complaint sooner rather than later.