Everything you need to know about £16billion car finance scandal ahead of huge ruling in DAYS – could you be owed cash?
A decision is set to be made in days as to whether £44billion worth of cash should be handed out by motor finance providers as compensation for undisclosed broker commission arrangements.
1
The Court of Appeal ruled in October that the firms broke the law by not telling borrowers about the broker commission terms.
The case has now been taken to the Supreme Court, which will decide on Friday whether customers can be compensated.
Lenders including Barclays, Lloyds, Santander UK and Close Brothers may be liable to pay out £44billion in compensation, analysts have suggested.
However, there have been recent reports that the Government could step in to limit the compensation claims.
Reporting in The Guardian suggest Chancellor Rachel Reeves may step in to overrule the Supreme Court's decision over concerns about what such a hefty sum of compensation could do to the industry.
These laws would set clear rules on disclosing broker commission fees and could even apply retroactively to existing cases.
The move would be almost unprecedented from the Treasury and would prevent the scandal spreading to other financial products beyond car loans.
The Financing and Leasing Association, which represents motor finance companies, has warned the decision could harm the motor finance market if it's upheld.
They say it could lead to less lending, higher borrowing costs, and even company closures.
Courmacs Legal, a law firm representing 1.5million car finance victims, warned millions of consumers could be harmed if the Government does decide to cap or limit the financial redress for car finance victims.
Man 'missed being in debt' after selling beloved Corvette - but little-known equation helped get it back with no payments
Darren Smith, the law firm's managing director, said: "The billions owed to victims would undoubtedly help generate economic growth just as in the PPI scandal.
"Doing right by consumers is also good for the UK economy."
What did the courts find?
Regulators and courts have found that many of the car finance deals signed between 2007 and 2021 did not properly inform consumers about charges and commission.
This is because banks allowed car dealerships and brokers to set their own interest rates on loans.
Under these now-banned discretionary commission arrangements (DCAs), dealerships and brokers had a financial incentive to charge higher interest rates, as their commission increased proportionally.
But many customers were not aware of this practice.
What is the FCA investigating and who is eligible for compensation?
What is being investigated?
The FCA announced in January 2024 that it would investigate allegations of "widespread misconduct" related to discretionary commission agreements (DCAs) on car loans.
When you buy a car on finance, you are effectively loaned the value of the car while you pay it off.
These loans have interest payments charged on top of them and are often organised on behalf of lenders by brokers - usually the finance arm of a dealership.
These brokers earn money in the form of commission - a percentage of the interest payments on the loan.
DCAs allowed brokers to, to a certain extent, increase the interest rate on a loan, which in turn increased the amount of commission they received.
The practice was banned by the FCA in 2021.
Who is eligible for compensation?
The FCA estimates that around 40% of car deals may have been affected before 2021.
There are two criteria you must meet to have a chance at receiving compensation.
First, you must be complaining in relation to a finance deal on a motor vehicle (including cars, vans, motorbikes and motorhomes) that was agreed before January 28 2021.
Second, you must have bought the vehicle through a mechanism like Personal Contract Purchase (PCP) or Hire Purchase (HP), which make up the majority of finance deals and mean you own the vehicle at the end of the agreement.
Drivers who leased a car through a scheme like a Personal Contract Hire, where you give the car back at the end of the lease, are not eligible.
How would customers get compensation?
If the Supreme Court rules to let customers be compesated, industry regulator the Financial Conduct Authority (FCA) may set up a formal redress scheme.
The regulator began working on the redress scheme in January last year.
The FCA has said it may set up the scheme as a way that reduces the scope for consumers to hire lawyers to make claims on their behalf.
Instead, the regulator could ask the lenders who carried out the mis-selling to check their records to decide who could get compensation.
But less than a quarter of people surveyed said they would trust the lenders to do this fairly.
A redress scheme would rely on lenders to identify and trace victims of mis-selling but could miss out significant numbers of people who should get compensation.
This is because they may have moved house or changed other important personal information such as their legal name.
Plus, 36% of potential claimants - around 8.4million people - said they have lost some of the paperwork from their previous car finance deals.
Are you due compensation?
More than 23million people believe they could be in line for compensation, polling by consumer law firm Slater and Gordon suggests.
The poll found that 45% of people believe they are likely to be eligible for some sort of compensation over motor finance deals signed between 2007 and 2021.
Consumer groups have estimated that motorists took out more than 30million car loans over those years.
If you think you should be compensated, consumer finance website MoneySavingExpert.com offers an email template to help you complain to your finance provider.
To download this, visit moneysavingexpert.com/reclaim/reclaim-car-finance.
You can also complain directly to your provider without using the template.
Anyone who took out car finance should file a claim, even if their previous one was denied.
In your complaint, ask whether you were overcharged due to your broker receiving a commission and ask the company to rectify this if it happened.
If you are not happy with the company's response then you can escalate your complaint to the Financial Ombudsman Service for free.
You have until July 29, 2026, or up to 15 months from the date of the company's final response letter to do so, whichever is longer.
Avoid using a claims management firm as they will take a portion of any successful claim.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Sun
30 minutes ago
- The Sun
Late Queen Elizabeth's iconic Range Rover fitted with mascot & enhanced security goes on market for £70,000
A LUXURY Range Rover once driven by the late Queen Elizabeth II is set to go under the hammer – complete with its royal mascot and bespoke security features. The 2006 L322 model was exclusively used by Her Majesty between 2006 and 2008. 8 8 8 And it's expected to fetch up to £70,000 when it goes on sale at the Silverstone Festival on August 23. The monarch famously took the wheel at events including the 2007 Royal Windsor Horse Show, with the vehicle specially kitted out for royal duties. It boasts enhanced internal wiring for security and communications, bespoke side steps, mud flaps, and even a made-to-measure dog guard – a nod to the Queen's lifelong love of dogs. Rear grab handles, since removed but with traces still visible, were once fitted to help her Majesty in and out. Perhaps its most charming feature is the silver labrador mascot, an emblem reserved only for the Queen's personal fleet. Adding to its rarity, the car is believed to be the only L322 Range Rover owned by the Royal Household fitted with the Jaguar-derived 4.2-litre Supercharged V8 – delivering performance as commanding as it was dignified. With just under 120,000 miles on the clock, the vehicle is described as being in 'exemplary condition throughout.' Rob Hubbard, Managing Director and Principal Auctioneer of Iconic Auctioneers, said: 'Vehicles with such distinguished provenance rarely enter the market, making this an exceptional opportunity for collectors and enthusiasts alike. 'Her Majesty Queen Elizabeth II 's personal Range Rover combines automotive excellence with an unmatched historical significance. 'We anticipate considerable interest in this vehicle as has been the case with other Royal vehicles we have offered.' George Foreman's 1995 yellow convertible Mustang is on sale for under $15,000 - and it only has 728 miles The regal ride is tipped to achieve between £50,000 and £70,000 when bidding opens – giving one lucky buyer the chance to own a piece of motoring royalty. But the Queen's former Range Rover isn't the only eye-catching lot hitting the block this summer. A 111-year-old Ford Model T with serious screen credentials was also up for grabs earlier in July – for a fraction of the price. The vintage motor, built in 1914 just months before World War One broke out, has appeared in Downton Abbey, Peaky Blinders and Mr Selfridge, as well as the blockbuster films Lady Chatterley's Lover and 1917. Shipped to the UK in the early 80s and later snapped up from a Ford showroom, the car boasts a 2890cc side-valve four-cylinder engine and can reach speeds of up to 45mph. 8 8 8 With over 15 million Model Ts built between 1908 and 1927, Henry Ford's creation once dominated roads worldwide. By the 1920s, more than half of the world's cars were Fords – and they cost as little as $260 new. The classic, which comes with a guide price of £15,000 to £20,000, went under the hammer at Historics in Buckinghamshire on July 19. For those on a tighter budget, The Sun has recently revealed the top 10 classic cars to buy for under £3,000. Meanwhile, classic car enthusiasts can also check out Top Gear's list of budget-friendly motors currently on the market. We've highlighted ten much-loved family cars from the 70s through the 90s that continue to hold strong value in 2025. Among them is the Ford Escort Mk2, now fetching thousands, with its Fast Ford racing and performance editions still turning heads today. 8 8
Daily Mail
30 minutes ago
- Daily Mail
The 37 taxes you pay and why it now takes £3.1m to feel 'wealthy' - This is Money podcast
While the average household pays £16,700 in direct tax on income, our audit shows this is just the tip of the iceberg. We all pay a multitude of other taxes, from air passenger duty to environmental levies on our energy bills. Lee Boyce, Simon Lambert and Georgie Frost discuss what the total sum is - and that our tax rate is more like 57 per cent. And tax rises don't always bring in more cash for the Treasury coffers. As the Government weighs up introducing yet another tax - this time a wealth tax - we explore why despite the allowance being slashed the capital gains tax take is down and what it means for the Chancellor's plans. How much you need to feel wealthy in different areas of Britain? Does £1million still cut it? The six burning questions everyone is asking financial advisers right now… and their expert answers And we answer a reader query: Could I give £250 gifts to 400 people who then pay them to my daughters to beat inheritance tax on £100,000? Listen to the This is Money podcast We publish the podcast every Friday on This is Money and at Apple Podcasts, Spotify, Amazon Music and more. Search for it at your favourite podcast platform. To download Apple Podcasts go to the App store. On Android devices, go to the Google Play store to download the podcast app of your choice. You can press play to listen to this week's full episode on the player above, and wherever you get your podcasts please subscribe and review us if you like the podcast. You can also listen to the latest episode, find the archive and join in the debate in reader comments on the This is Money podcast page.
The Sun
30 minutes ago
- The Sun
Huge £145m EuroMillions jackpot to be won TONIGHT – just hours before Lottery shut down for days
A MASSIVE £145 million EuroMillions jackpot is up for grabs tonight just hours before the lottery shuts down for days. From 11pm on Saturday, all draw-based game entries and in-store prize claims will be suspended as the National Lottery undergoes a major technology upgrade. Services will be down until Monday morning - including the National Lottery app and website - in what has been called the biggest system overhaul in more than three decades. Players participating in tonight's £145 million draw or this weekend's Lotto and Thunderball games have been urged to act quickly to avoid disappointment. Keen participants must pick up their ticket before Saturday night's deadline. And for those looking to increase their odds, top lottery expert Simon Horne exclusively tells Sun readers how to boost their chances of bagging the whole lot. From picking your lucky numbers to whether you should join a syndicate, there's a heap of practical ways to boost your chances of getting richer overnight. Of course, the only real way of increasing your chances of winning is to buy more tickets. Make sure you gamble responsibly. Only gamble with money you can afford to lose, and set a money limit before playing. If you need advice, visit or Is a syndicate worth it? A lottery syndicate is when a group of people put money into a pot for lottery tickets. There will be one person in charge - the syndicate manager - who will buy tickets and share out any winnings out among the group. Playing as part of a group could be a good way of boosting your chances of winning, as Simon, from The National Lottery operator Allwyn UK, explains. "If you join a syndicate of 10 people, then there's 10 tickets and 10 chances of winning, so there's clearly a greater chance of winning compared to if you just bought your own ticket," he said. The syndicate manager will need to register the group and list themselves as the person in charge with The National Lottery. Make sure to write all the terms and conditions of the agreement down, and get each person to sign it, said Simon. "If there's any confusion or complications down the line, then you can refer back to the agreement and then everyone knows where they stand," he said. The big downside to consider being part of a syndicate is that you'll need to equally split the pot between each person. So, if you were part of a syndicate of four people, splitting the £145million jackpot four ways would leave you with over £36million each - although that's still big winnings to walk away with. Pick YOUR lucky numbers You might think that picking up the most common numbers may mean you are more likely to win. The number 20 has been drawn the most at 111 times, according to which tracks lottery results. That's followed by the number 21 and 23, which has been drawn 109 times, then 42 (107 times) then 29 (104 times). The most common Lucky Stars are 3, which has been drawn 181 times and 2, which has been drawn 176 times. But you're better off picking whichever numbers you feel are best, said Simon. That's because, statistically, each number has an equal chance of being drawn. Many people pick their birthday numbers because they think they are lucky. "We all have lucky numbers - I know plenty of players who lean on lucky numbers, which could be phone numbers or numbers passed down from family members," said Simon. "Every set of numbers has the same chance of coming out. "The best strategy to play is the one that you think will bring you luck." Monitor your numbers Not sure your lucky numbers are working for you? You could keep an eye on how often your lucky numbers are being drawn, and if they're not coming up as often as you would like, you can try a different tact. The National Lottery app stores all your tickets from draws you have entered. The app is free to download from either the App Store on iPhone, or the Google Play store on Android devices. That means you can go back in and check your most profitable numbers. You could make a spreadsheet of how often your lucky numbers are being drawn, and every three months, see whether it's worth keeping them, or ditching them for alternatives. According to the unluckiest Euromillions numbers are You might want to avoid "unlucky" numbers - which are the ones drawn the least. These are 22 (66 times), 40 (74 times) and 18 and 43 (78 times). The National Lottery app is free to download from either the App Store or Google Play. Timing matters Timing matters when it comes to buying your ticket, said Simon. If you leave it to the last minute, then there's a risk that you run out of time to buy your ticket. You need to buy your ticket before 7:30pm tonight - otherwise you'll miss out. "My main advice is not to leave it too late - don't rush into the newsagents or load up your app at 7:25pm," he said. "You might not be able to upload money onto your online account, or buy your ticket, in time and you could miss the draw."
