
Supreme Court to Rule on Car Finance Commission Case This Week
Landmark decision from the Supreme Court will be announced imminently.
A major legal decision is set to be announced on Friday, 1 August, one that could send shockwaves through the UK’s motor finance industry.
After months of courtroom arguments, consumer claims, and mounting pressure on regulators, the Supreme Court will finally rule on whether the practice of hiding commissions was unlawful. Depending on the outcome, the industry may be facing tens of billions in compensation payouts, while millions of drivers could be in line for a refund.
The Background
From 2007 to 2021, millions of drivers across the UK signed up to car finance deals, including Hire Purchase (HP) and Personal Contract Purchase (PCP). Many of these agreements were arranged through brokers or dealerships, and what most customers didn’t realise is that the interest rate they were charged wasn’t always based on creditworthiness alone.
In many cases, the broker was incentivised to bump up the interest rate because they were earning commission. And the higher the rate, the bigger their cut. These commissions were almost never disclosed, leaving consumers in the dark.
The Court of Appeal found that this lack of transparency breached the legal duty brokers had to either act in the customer’s best interests or make it clear that they weren’t doing so. Now, it’s up to the Supreme Court to determine whether that ruling stands.
What’s at Stake?
At the heart of this case is a simple question: were consumers misled into paying more than they should have, and if so, who should foot the bill?
Should the Supreme Court agree with the Court of Appeal, the implications are enormous. The finance industry may be forced to redress millions of agreements stretching back over a decade. The total cost could hit £30 billion to £44 billion.
That would make it one of the largest financial scandals in UK history, surpassing even the PPI crisis in terms of scale and compensation.
The fallout won’t just affect lenders. Dealerships, brokers, claims management firms, and even car manufacturers who offered finance through branded schemes could all find themselves drawn into the aftermath.
The Regulator’s Role
The Financial Conduct Authority (FCA, the body responsible for overseeing how financial products are sold and regulated in the UK) is currently in a holding pattern. It’s paused complaint handling for motor finance commission cases until 4 December 2025, giving itself time to assess the outcome of the Supreme Court case and decide how to respond.
We’re expecting an announcement from the FCA by mid-September, which will outline the next steps. This will include how compensation is to be delivered, who qualifies, and what evidence (if any) consumers will need to provide.
There are two main routes the FCA could take:
1. Opt-in Redress Scheme
This is the more traditional approach. Affected consumers would need to make a claim, either directly with their lender or through a regulated third party. The FCA would provide a framework for what constitutes a valid claim, and lenders would be expected to assess each one in line with those rules.
This model is more manageable for financial institutions and better suited to cases where individual circumstances vary — for instance, when assessing whether a customer was properly informed about a commission or whether they suffered financial harm.
2. Opt-out Redress Scheme
Under this model, lenders would proactively identify affected customers and offer compensation automatically, unless the customer declines it. While this approach is more consumer-friendly and could speed up payouts, it’s rarely used in financial regulation.
This is because identifying every eligible agreement, especially ones signed 10 or 15 years ago, is a complex and expensive task. Many lenders may no longer hold complete records, and the legal framework for imposing an opt-out scheme would likely require government intervention or emergency legislation.
Given these hurdles, the most likely outcome is an opt-in scheme, at least initially.
What It Means for Drivers
If you took out a car finance agreement between 2007 and 2021, you may have been charged more than necessary, and you might be owed compensation. Even if you’ve since paid off the agreement, sold the vehicle, or the dealership has gone out of business, you could still have a valid claim.
However, compensation is unlikely to be issued automatically. If the FCA opts for an opt-in model, you’ll need to act, and that means checking your eligibility and, when the time comes, submitting a claim.
Fortunately, getting started is easy.
Check If You’re Affected
You don’t need to retrieve old paperwork or search through historical bank statements to find out if you could have a claim. Our free eligibility tool can help you find out in under a minute. All we need is your car registration number or the name of the lender.
It’s secure, quick, and there’s no obligation to proceed unless you want to. If your agreement involved a hidden commission, and you meet the criteria, you could be entitled to thousands of pounds in compensation.
The clock is ticking. With the Supreme Court ruling due on 1 August and the FCA set to announce its response within weeks, now’s the time to get ahead of the curve.