Car finance ruling LIVE: Supreme Court denies millions of drivers compensation

Ruling 'narrows scope' for compensation claims

Paul Barker, editor of Auto Express, said: “Today’s Supreme Court ruling – which found that car finance firms did not unlawfully mis-sell products simply by failing to disclose commissions – narrows the scope for car finance compensation claims, but it doesn’t eliminate them entirely.

“Anyone who signed up for a discretionary commission arrangement (DCA) between 2007 and 2021 should still be eligible for compensation; the FCA is expected to set out next steps regarding this ruling in the coming weeks.

“In the meantime, we strongly advise against using claims management firms, which often take a hefty cut of any compensation.

“Instead, there are free tools and official routes available to help you make a claim directly.

“And if the FCA introduces the mooted ‘opt-out’ scheme, you may not need to do anything at all – your lender will be required to contact you.

“Until then, sit tight, avoid unnecessary fees and keep an eye on updates from the regulator.”

Comments on ruling

Kavon Hussain, founder and lawyer at Consumer Rights Solicitors, who represents Amy Hopcraft and Andrew Wrench, two lead claimants in the landmark Court of Appeal ruling against motor finance lenders, said it was “disappointing” the Supreme Court did not fully uphold the original ruling.

Mr Hussain said: “The Supreme Court ruling supports our view that lenders had acted unfairly in millions of car finance deals.

“This should now pave the way for the biggest compensation payout to motorists in British legal history. We will fight to get consumers the money they are owed by these lenders.

“It is, however, disappointing the court did not uphold the ruling of the Court of Appeal in full, which found the vast majority of deals had been unlawful.

“Irrespective of this outcome, the car finance industry has been exposed ripping millions of customers off.”

'Dumbfounded' by Supreme Court ruling

Marcus Johnson said that he was “dumbfounded” by the Supreme Court ruling.

He said: “It is obviously not OK, my case was successful, but it sounds like it’s fine to secretly overcharge customers for commission.

“The current financial agreement on my current vehicle in the contract – because I have looked through it all since that contract – is all completely clear.

“I don’t disagree with commission. I now understand that that is how the market works.

“My case was a case of it being so secretive.”

When asked how he felt when he found out the result of the Supreme Court case, he said: “It was surprise and sadness, because I was quite confident, just based on how I felt about it, the unfairness of what happened to me.

“I thought people looking at all the information would come to the same conclusion and I’m just dumbfounded.

“I feel terrible that people won’t be able to claim anything like I have.”

'Transparency is key,' says lawyer

Kavon Hussain, the lawyer representing the two drivers whose cases were dismissed at the Supreme Court, said “transparency is key” for car finance loans, adding that he and his clients are “disappointed” in the justices’ decision.

Speaking outside the court, he said: “The lenders and car dealers now, if you go for a loan, usually on the first page they will say what the commission is that’s being paid to the brokers. They don’t hide it any more.

“In a sense, that’s some good that’s come out of this. They’re very keen to make sure consumers and even businesses know exactly how much commission they are paying.

“There has to be absolute transparency on the true cost of the loan. If there’s commission, make the client aware of it, don’t hide it somewhere on page 15.

“Transparency is key.”

Hope consumers 'get protection they deserve,' says Lib Dem MP

Lib Dem MP and Treasury Committee member Bobby Dean said he hopes consumers are able to “get the protection they deserve” following the ruling from the Supreme Court on car finance.

Speaking outside the courtroom, he said: “I think this is a good day for the consumer. What’s been proven to industry is that you must be honest in your arrangements and you cannot hide the commission you’re going to be receiving in any contract or arrangement.

“Hopefully consumers now get the protection they deserve.”

Speaking of the Supreme Court justices’ ruling, he continued: “The consumers were treated unfairly and they particularly focused on the fact that you must disclose your commission arrangements.

“Now it’s incumbent on the regulator to make sure that the compensation scheme is widely recognised and it’s not lender-led, and people are able to come forward and make the claims on any compensation they might be due.”

Martin Lewis shares reaction to ruling

Martin Lewis has shared his reaction to the Supreme Court's car finance compensation ruling. He urged drivers to avoid signing up to a claims firm immediately.

In a post shared to X/Twitter, he said: "NEWS #SUPREMECOURT OVERTURNS TWO OF THREE COURT OF APPEAL #CARFINANCE RULINGS.

"1. Finance companies bribed the dealers REJECTED 2. Dealers owed a fiduciary duty to customers (so shouldnt have interest in the conclusion of the transaction).

"If right the payment of commission would be a breach, so finance companies would be liable to compensate customers REJECTED 3. Argued in one of the three cases, the relationship was unfair under consumer credit act UPHELD and compensation awarded.

"Now to piece together what this means in practice. Give me time. Its complex. We're piecing it together."

To read more, click here

Supreme Court partially overturns landmark ruling

The Supreme Court has partially overturned a landmark ruling on car finance commissions.

The move will have huge implications for banks that may have faced tens of billions of pounds in compensation payouts.

However, experts are poring over the ruling to assess what it means for the up to 23 million drivers who were expecting a payout.

The Treasury said: “We respect this judgment from the Supreme Court and we will now work with regulators and industry to understand the impact for both firms and consumers.

“We recognise the issues this court case has highlighted. That is why we are already taking forward significant changes to the Financial Ombudsman Service and the

Consumer Credit Act. These reforms will deliver a more consistent and predictable regulatory environment for businesses and consumers, while ensuring that products are sold to customers fairly and clearly.”

Supreme Court decision explained

Lord Reed said: “For the reasons set out in detail in a judgment published today, the Supreme Court allows the appeals brought by the finance companies.

“However, we uphold Mr Johnson’s claim that the relationship between him and the finance company was unfair, and we allow the appeal in his case only because the Court of Appeal made a number of mistakes in reaching its decision.

“Retaking the decision on a proper basis, we award him the amount of a commission plus interest.

“The other customers’ claims are rejected.”

Treasury will work with regulators

The Treasury has said it will work with the industry and regulators following Friday’s Supreme Court ruling.

A spokesperson said: “We respect this judgment from the Supreme Court and we will now work with regulators and industry to understand the impact for both firms and consumers.

“We recognise the issues this court case has highlighted. That is why we are already taking forward significant changes to the Financial Ombudsman Service and the Consumer Credit Act.

“These reforms will deliver a more consistent and predictable regulatory environment for businesses and consumers, while ensuring that products are sold to customers fairly and clearly.”

Lenders avoid potentially having to pay compensation

Lenders have avoided potentially having to pay compensation to millions of drivers after the Supreme Court ruled that they are not liable for hidden commission payments in car finance schemes.

Dealer has commercial interest from start to finish, says judge

Lord Reed said in order to understand the decision, it would be necessary to understand the dealer has a commercial interest from start to finish.

In one example, he said the lender is unwilling to lend the customer enough money to buy the car, the dealer could offer a personal loan in order to bridge the gap so it could secure a sale.

Decision announced on Friday afternoon amid concerns of outcome

Supreme Court President Lord Reed explained why the decision is being made on Friday afternoon.

He said the outcome may "affect the price of securities in the car price market."

He continued: "The markets will need time to digest and consider its implications.”

Supreme Court set to pass judgement

The Supreme Court is set to give their judgement.

Man says he was 'completely misled' by dealer when he took out car loan

Roy Turner is another who is seeking compensation after finding out commission had been made from his loan.

The 57-year-old, from near St Andrews in Scotland, paid £8,640 for a BMW 118D in 2016.

But because the interest rate on the loan was 39%, he shelled out another £9,356 in interest.

“I was completely misled by the dealer and lender when I took out a loan to buy my car,” he says.

“The financial impact on my family of the hidden commission was considerable and I am fighting to get the compensation I’m owed and see those responsible held to account.”

He added: “I hope politicians leave the judges alone and do not interfere in the legal process. All I want is the compensation I am owed.”

Expert warns finance companies could pull out of UK market if there's a large pay out

Motor trade expert Fraser Brown has warned some lenders will pull out - while others will up rates - if there is a huge compensation bill.

Mr Brown, founder of MotorVise which works with dealerships and manufacturers throughout the UK and internationally, has been in the industry for 30 years.

He says commissions on loans have always been paid, and that the rates charged to customers had traditionally been one of the flexible elements dealers could use.

“Commissons have been paid since the day dot, or certainly for the past 30 years plus,” he said.

Mr Brown said commissions were still paid, but that dealers and brokers now had to point it out to customers.

He insisted that “customers aren’t interested”, when told commission was being earned, adding “they just don’t look at it”.

And he warned: “If there is a large-scale pay-out, there will be some finance companies that will withdraw from the UK. There are a number that will pull out.

“Others will put up the rates they offer to cover the compensation. The loser will be the consumer.”

'Vulnerable new mum' feels she was 'exploited' by car dealer who snatched commission

Jemma Caffrey says she feels “exploited” after finding out the dealer where she bought her car had earned commission.

The 42-year-old from Blackburn bought her Vauxhall Corsa for £7,000 in 2009.

She didn’t have a car before but needed one after her son was born with medical complications and she needed to take him for regular hospital appointments.

Money was even tighter as she had to go from having a full-time to a part-time job.

The interest rate on her five-year Santander loan was 17.1%.

Jemma, who now works for a housing association, contacted law firm Courmacs Legal who were able to tell her she was charged commission but doesn’t know how much and whether the interest rate she paid was higher as a result.

“I feel I was taken advantage of as a vulnerable new mum”, she said. “I felt exploited because I was in a vulnerable possible.”

Martin Lewis: 'Do not sign up to claims firms'

Martin Lewis is warning motorists against rushing to sign up to claims firms before the Supreme Court ruling is handed down.

Taking to social media, the consumer champion said: “People asking me "what to do". The very strong answer right now is nothing.

“This will all play out tonight then likely over the next six weeks or so and then we'll have a good idea. Do not sign up to a claims firms. Don't do anything now.”

First 'large-scale consumer mis-selling scandal' of social media age, expert says

Another lawyer from the same firm, Mahesh Vara, believes this is one of the first consumer misselling scandals of the social media age.

He added that the wide circulation of the case is leading people to expect a payout, which the FCA will need to consider.

He tells The Indpendent: "It’s now leading to a greater expectation of there being almost a guaranteed payment. That is what the FCA will have to consider.”

Claims management companies have already started sharing advertisements ahead of the court's decision. Some regulators have warned consumers to avoid using them as they could be charged for a claim that won't be needed depending on today's decision.

How have consumers been harmed?

An expert believes something has been missing from the conversation about today's ruling - the harm the misselling could have had on consumers.

Lawyer Wayne Gibbard, who is a partner at Shoosmiths law firm in charge of the automotive finance practice, said the Supreme Court decision is "absolutely fundamental" to whatever comes next.

The FCA has previously said that if it believes consumers have been harmed en masse, it will set up a compensation scheme, which will be confirmed within six months of the judgment.

Mr Gibbard told The Independent: “People can make an informed decision – the query is around their harm, have they been mis-sold something? And I think that’s been absent in the conversation.”

How many people will be able to claim compensation?

Estimates suggest as many as 23 million UK drivers might be able to claim compensation following this afternoon's ruling.

The decision is due to be announced shortly after 4.30pm this afternoon.

Why is this case so important?

A finance expert has shared why the case is so important for motorists.

Wayne Gibbard, who is in charge of the automotive finance practice at law firm Shoosmiths, said the ruling will be “absolutely fundamental to what happens next” for the sector.

He said it will inform the scale of potential compensation for customers, which will be overseen by the UK’s Financial Conduct Authority (FCA).

The FCA previously said that, if it thinks there was widespread harm to consumers as a result of commission payments, then it could set up an industry-wide redress scheme.

It said it will confirm within six weeks of the Supreme Court judgment whether it is planning to launch such a scheme. Mr Gibbard stressed that this response will be particularly important going forward.

He said: “People can make an informed decision – the query is around their harm, have they been mis-sold something? And I think that’s been absent in the conversation.”

Martin Lewis says car finance compensation ruling 'could do more harm than good'

The bombshell car finance ruling is due today, and Martin Lewis has issued a warning.

Today the Supreme Court will announce its decision on whether motorists will be reimbursed on their hire-purchase agreements. Car dealers have been put under the spotlight following concerns over "secret" commission pocketed from banks and other finance firms.

In October last year, the Court of Appeal ruled the hidden payments made before 2021 without the motorist’s consent were unlawful. Ahead of the ruling which is set to take place late this afternoon, Martin Lewis shared his fears on the outcome of the court case - which could see 23 millions drivers owed compensation. It comes after news anyone buying fuel next week will be given '£15 charge' warning by The AA.

"This is going to be a shock announcement coming. It has ramifications not just for car finance firms but right across the financial services sector," the founder of MoneySavingExpert.com said. "Depending on what the decision is, it could even have ramifications across the economy."

Martin Lewis says car finance compensation ruling 'could do more harm than good'

Car finance scandal explained

The UK’s Supreme Court is set to give a long-waited judgment in relation to the car finance commission saga today.

It is set to bring clarity over how the law should be applied to car finance arrangements following a Court of Appeal decision last October. The ruling could have massive ramifications for the financial services sector and the economy as a whole, and ass many as 23 millions drivers might be eligible to claim compensation.

But why is this happening, and what could it mean for you? Read all about it here.

Banks already setting money aside ahead of ruling

Lenders, including high street banks, are said to be bracing for impact ahead of today's ruling.

High street bank Lloyds is said to have already put £1.2billion aside, while Santander has set aside £295million. Close Brothers is said to have saved £165million.

These sums may be nowhere near enough to compensate consumers if the ruling comes down hard on lenders.

How much could the ruling cost lenders?

Analysts put the compensation payout anywhere between £30billion and £44billion - which would rival the infamous £50billion PPI scandal.

The Supreme Court has the power to take this beyond the motor industry - which could see any hire purchase deal involving undisclosed commissions come under fire.

This means people who purchased a bed, fridge, laptop or any other item could be in line for a payout if the court decides so.

People who think they may be affected should put in claim now

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.

Chancellor fears large compensation bill could mean less money to lend

Chancellor Rachel Reeves has expressed concerns that a large compensation payout from today's ruling could leave banks with less money to lend.

This could be another factor to add to the slowed economic growth the country is currently experiencing.

However, other reports suggest the Supreme Court could provide lenders some relief - which has led analysts to reduce their payout forecasts.

Most Brits purchase their new or second cars under a finance agreement. Buyers usually put down a deposit with lenders providing the credit for the rest of the vehicle's cost.

Ruling could 'shake the foundations' of consumer lending, Martin Lewis says

Martin Lewis said today's decision could have devastating consequences for consumer lending, limiting the amount of available credit for Brits.

He said: “If the Supreme Court upholds the Court of Appeal’s decision the knock on effects could be substantial on other forms of lending and on the economy. To be honest it could shake the foundations of consumer lending in the country, meaning less possible available credit for many. So much so that I have concerns that it could do more harm than good.”

Martin Lewis says ruling could impact the British economy

Consumer champion Martin Lewis warned the outcome of the case had huge economic and political implications.

Mr Lewis, founder of MoneySavingExpert.com, said: “This is going to be a shock announcement coming. It has ramifications not just for car finance firms but right across the financial services sector. Depending on what the decision is, it could even have ramifications across the economy.”

What sparked the case?

The three drivers, Marcus Johnson, Andrew Wrench and Amy Hopcraft, all used car dealers as brokers for finance arrangements for second-hand cars, all worth less than £10,000.

Only one finance option was presented to the motorists in each case, with the car dealers making a profit from the sale of the car and receiving commission from the lender.

The commission paid to dealers was affected by the interest rate on the loan.

The schemes were banned by the FCA in 2021, with the three drivers taking legal action individually between 2022 and 2023.

After the claims reached the Court of Appeal, three senior judges ruled that the lenders were liable to repay the motorists the commission, as there was “no disclosure” of the commission payments in Ms Hopcraft’s case, and “insufficient disclosure” in the case of Mr Wrench.