Car Finance Scandal: With Courts Siding with Consumers, What’s Next?
2025 looks set to be a significant year for claims involving mis-sold car finance claims, so explore what developments consumers can expect to see over the next few months.
After years of uncertainty, 2024 brought a turning point for mis-sold car finance claims. Several court rulings landed in favour of consumers, expanding the scope of investigations and reinforcing the case against lenders. With regulators facing mounting pressure and fresh legal challenges on the horizon, 2025 is shaping up to be a decisive year for claimants.
But what happens next? Will lenders start offering settlements, or will they dig in their heels? Will regulators step up, or will consumers have to keep fighting for justice? If you’ve been mis-sold a PCP or HP agreement, here’s what to expect in 2025—and why now could be the best time to act.
Anticipated Developments in Car Finance Claims Throughout 2025
April 2025: The Appeal That Could Reshape the Industry
In October 2024, the UK Court of Appeal delivered a landmark ruling that significantly broadened the scope of mis-sold car finance claims.
The court determined that it was unlawful for car dealers acting as brokers to receive commissions from lenders without obtaining the customer’s informed consent, a decision that extends beyond previously scrutinised Discretionary Commission Arrangements (DCAs) to encompass all commission agreements.
This ruling has the potential to affect a vast number of consumers, as the Financial Conduct Authority (FCA) estimates that between April 2007 and January 2021, 99% of motor finance agreements included a commission, with 40% involving DCAs.
The Supreme Court has granted the motor finance dealers permission to appeal this decision, with a hearing expected before April 2025. The outcome of this appeal will be pivotal, as it could influence the FCA’s ongoing investigations. Currently, the Financial Conduct Authority is focused on DCAs, but a decision upholding the Court of Appeal’s ruling may prompt the regulator to expand its scrutiny to include non-DCA commission agreements.
May 2025: The Long-Awaited FCA Report
The FCA’s investigation into Discretionary Commission Arrangements, launched in January 2024, was originally set for completion by September 2024. However, delays in data collection and emerging legal challenges have pushed the publication date to May 2025.
This investigation is crucial in determining:
A. Whether consumers were mis-sold finance under DCAs
B. Who is entitled to compensation
C. Whether a formal redress scheme will be implemented
The Supreme Court’s ruling on commission agreements may further influence the FCA’s stance, potentially expanding the scope of its review or altering complaint-handling processes.
December 2025: The Final Deadline for Firms to Respond to Complaints
With a surge in complaints expected, the FCA has extended the deadline for firms to provide final responses to existing motor finance commission complaints until 4 December 2025.
This extension applies to all commission-related complaints, not just those involving DCAs.
Normally, firms must respond within eight weeks, but given the scale of potential claims and the ongoing regulatory review, a longer timeframe has been granted. Once this deadline passes, the FCA is expected to reinstate standard complaint response periods, alongside announcing next steps for consumers and lenders alike.
Additionally, the Financial Ombudsman Service referral window has been extended—complainants now have until 29 July 2026 or 15 months from their final response letter, whichever is later, to escalate their case.
How Politics and Regulation Could Impact Car Finance Claims
These are the most important milestones expected to take place in the coming months, but due to the complexity and scale of the issue, these dates may change, and many new developments could arise. For example, consider the involvement of Chancellor Rachel Reeves.
In January 2025, she expressed concerns regarding the potential economic impact of compensating consumers. She cautioned that substantial compensation payouts could destabilise the motor finance market, potentially leading to increased costs or reduced availability of car loans, which would adversely affect working families.
While the stability of the financial sector is crucial, it’s essential to recognise the rights of drivers who were misled into agreements with undisclosed commissions. Denying compensation to affected consumers not only undermines trust in the financial system but also sets a concerning precedent where corporate interests are prioritised over individual rights.
Analysts Predict £30 Billion Hit to Motor Finance Industry
Analysts predict that the financial fallout from the car finance mis-selling scandal may be monumental. Moody’s estimates industry-wide liabilities might reach £30 billion, while HSBC analysts suggest the figure could soar to £44 billion, making it one of the most costly financial redress schemes in recent history.
Moreover, the Financial Conduct Authority has urged lenders to prepare for substantial compensation payouts, with some analysts projecting costs between £8 billion and £13 billion in the near term. As investigations unfold and legal battles continue, the true scale of the financial impact remains uncertain—but the industry is bracing for a reckoning.
Take Action Now – 2025 Will Be a Defining Year
With a Supreme Court appeal, an FCA investigation nearing its conclusion, and lenders already setting aside billions, the landscape is shifting fast.
Those who act first will be in the strongest position should a redress scheme be implemented. If your car finance agreement included a commission—whether disclosed or not—you could be entitled to compensation.
Use our eligibility checker to quickly find out if your lender or vehicle registration falls within the scope of mis-sold agreements. It’s a simple step that can make all the difference.
Check your eligibility today and stay ahead of the curve.
