Supreme Court Rules Against Millions in Car Finance Compensation Claims

The UK Supreme Court has ruled in favor of finance companies in a major car finance scandal case, overturning a previous Court of Appeal decision that found commission payments by finance lenders to car dealers were unlawful without full disclosure to consumers. The ruling means millions of motorists who were not informed about the commission paid to dealers may not receive compensation, as the court acknowledged the dealers' commercial interest in the sales and their financial incentives. The Financial Conduct Authority (FCA) intervened, warning that the ruling would impact the car finance market and pledged to outline an industry-wide redress scheme following the decision. While one claim was upheld due to an unfair relationship between the driver and finance company, two others were rejected, emphasizing the court's view that dealers were not acting solely in the customers' interests but had a commercial stake. The decision was deliberately announced after trading hours to prevent market disruption, reflecting the ruling's potential billion-pound consequences for banks and finance firms involved. The FCA’s ban on discretionary commission arrangements (DCAs) in 2021 and ongoing investigations underscore regulatory concerns about transparency and fairness in car finance agreements.