The Supreme Court will deliver its judgment on car finance compensation this Friday, August 1 – we explain everything you need to know, including a separate FCA investigation
Millions of drivers could soon find out if they are due compensation over claims of car finance mis-selling with a major Supreme Court decision due this week.
The Court of Appeal ruled in October 2024 that car finance customers must be clearly told how much commission would be paid, and they would need to consent to this – otherwise it would be illegal for the lender to pay any commission to the dealer.
The car finance firms involved in the case – Close Brothers and Motonovo – then appealed this judgment at the Supreme Court. If the Supreme Court upholds the original Court of Appeal ruling, this could mean people who have previously taken out a car on finance could be due compensation.
However, how much could be due, and who exactly would get the compensation, remains to be seen – but lenders have already put aside billions of pounds in the event of payouts.
Consumer rights experts including Martin Lewis have also warned that politicians could step in and overturn the ruling. The Supreme Court will deliver its judgment this Friday, August 1.
There is also a separate car finance investigation by the Financial Conduct Authority (FCA) – which was launched before the Court of Appeal decision – and this is one is specifically about “discretionary commission agreements” (DCA).
DCAs allowed dealers and brokers to increase the commission they earned by charging customers more through higher interest rates.
They were banned in 2021 but the FCA launched a probe in January 2024 to determine if customers should be owed compensation. The outcome of this FCA investigation has been put on hold until the Supreme Court ruling.
Martin Lewis website has said that if the Supreme Court rejects the Court of Appeal ruling, it is still likely the DCA claims will go ahead through the regulator.
MoneySavingExpert.com has previously urged anyone who thinks they may have been affected to put in a complaint now, in case a cut-off date for complaints is introduced retrospectively.
You should put your complaint in directly to the lender that provided the car finance – not the broker or car dealer where you got your vehicle from.
You could end up being eligible for compensation if you weren’t told about commission and may have paid too much for your car finance, or if you had a car finance deal that contained 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 again, it is best to put your complaint in sooner rather than later.