Car finance LIVE: Watch live as 23million drivers hear if they're owed THOUSANDS in compensation
Today's outcome could uphold a previous Court of Appeal decision, which ruled ruled 'secret' commission payments to car dealers as part of finance arrangements made before 2021 were unlawful.
It came after three motorists who bought their cars before 2021 hadn't been informed that the car dealers - who were acting as brokers for their line of credit - would receive commission from the lenders.
16:25Graham Hiscott
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.'
Graham Hiscott
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.'
15:25Ryan Fahey
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.'
14:27Ryan Fahey
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.
14:16Ryan Fahey
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.'
13:47KEY EVENT
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.
13:12Monica Charsley
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.'
11:57Monica Charsley
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'
11:51Graham Hiscott
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.
11:04Ryan Fahey
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.
09:59Ryan Fahey
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.
09:51KEY EVENT
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.
09:41Ryan Fahey
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.
09:34KEY EVENT
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.'
09:29Ryan Fahey
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.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
2 hours ago
- Telegraph
An establishment stitch-up at the expense of consumers
The market reaction to the Supreme Court's intervention in the car finance mis-selling scandal tells you everything you need to know about this grubby saga. Shares in Lloyds Bank, the UK's biggest car finance provider through its Black Horse brand, jumped as much as 7.5pc when trading commenced on Monday morning, leaving it at the top of the FTSE 100 leaderboard. The share price of Close Brothers, a specialist lender that is disproportionately exposed to the car finance market, surged as much as 25pc having sunk to 30-year lows as the industry braced for PPI-sized payouts. Shares in Bank of Ireland and Barclays, both of which have car finance arms, rose 4.2pc and nearly 2pc respectively. Make no mistake about it, the Supreme Court's ruling is a serious let-off for the banks and other lenders that have a big presence in the car loans space. True, revised payout estimations of between £9bn and £18bn to customers who were mis-selling victims is not to be sniffed at. However, even the top end of the range is less than half the £44bn bill the sector was collectively thought to be facing before the Supreme Court decision. The lower end would be just a quarter. It is a massive result for an industry that fought this case tooth and nail. Anthony Coombs, a former Tory MP and now chairman of lender S&U, whose shares had tanked 33pc at one stage, described it as 'a victory for common sense'. I'm not so sure about that. I certainly share the concerns of many about the shameless ambulance-chasing law firms and claims management firms that have helped fuel Britain's compensation culture. Clearly, it means there is a high risk of people jumping on the bandwagon and lodging bogus claims that the banks then feel the need to recover through higher borrowing costs for all of us. But that's hardly a new phenomenon – there will always be a relatively small number of chancers looking to game the system wherever they can. I'm less inclined to celebrate what has the unmistakable feel of an establishment stitch-up at the expense of consumers. I have a natural aversion to the armies of highly-paid lobbyists who go into bat for big business, skewing what is already a massive power imbalance even further. Consumers already face a David-versus-Goliath battle to be treated fairly. In this case, the scare tactics employed were particularly shameless as industry campaigners sought to ensure the Supreme Court's ruling was as favourable as possible to the banking community. Even now, despite a significant legal climbdown, these same activists felt the need to take to the airwaves to issue fresh apocalyptic warnings. Stephen Haddrill, the director general of the Finance & Leasing Association, claimed the scheme could push up borrowing rates for car-buyers as if somehow large corporations have no choice but to always pass on any additional costs to their customers. The same arguments were rolled out after Covid when companies claimed they were lifting prices to offset their own cost increases and they were no more convincing back then – with research suggesting pandemic profiteering was rife among the biggest companies. As if that wasn't sufficiently disingenuous, John Phillipou, chairman of the Finance & Leasing Association, weighed in too, complaining that there was a risk of harm to Britain's 'investability'. Still, lobbying is what lobbyists do and at least they make no attempt to hide their true intentions. Moreover, Phillipou is only echoing our alarmist Chancellor, and it is surely far more outrageous that she sought to meddle in the outcome. Rachel Reeves has absolutely no business at all involving herself in such matters, while there is zero evidence to back up her suggestion that large-scale payouts represented a threat to growth. Yet, as with the wrong-headed ousting of the chairman of the competition watchdog, the Treasury will stop at nothing in its attempts to deflect blame for Britain's floundering economy from the Chancellor's job-wrecking tax raid. The reasons for the UK's lack of competitiveness are innumerable and too often they can be laid at the door of 11 Downing Street. Reeves's willingness to side with bank bosses instead of standing up for the little man is also disquieting. The job of the Supreme Court judges is to ignore the noise and correctly apply the law but ministers seem to have allowed themselves to be captured by the lobbying fraternity. Voters may see it as another betrayal from a party that has waged war on hard-working families with its tax blitz. As Liberal Democrat MP Bobby Dean rightly said, Government interventions like this set a bad precedent if the reason for intervening is that it might damage industry, 'because then almost every consumer redress case would fall'. Dean, who is a member of the powerful Treasury select committee that polices the City, regulators and the Treasury, points out that compensation schemes give consumers confidence to borrow and invest, 'if they know they will be protected when companies take advantage of them'. It is now down to the Financial Conduct Authority (FCA) to restore the balance after it confirmed it will consult on a redress scheme for those still entitled to compensation. But that hardly inspires confidence. After all, this is the same FCA that was described in a damning report by MPs and Lords just last year, as 'incompetent at best, dishonest at worst'; its actions as 'slow and inadequate.' The chances of the watchdog suddenly showing some teeth seem slim.
South Wales Argus
2 hours ago
- South Wales Argus
FCA considers £950 car finance compensation for motorists
The announcement was made as many motor finance firms were not complying with rules or the law by not providing customers with relevant information about commission paid by lenders to the car dealers who sold the loans, the FCA said. It comes after Friday's (August 1) ruling by the Supreme Court on cases in which the FCA had intervened. While some motor finance customers will not get compensation because in many cases commission payments were legal, the court ruled that in certain circumstances the failure to properly disclose commission arrangements could be unfair and therefore unlawful, the FCA added. Our aim is a compensation scheme that's fair and easy so there's no need to use a claims management company or law firm. We'll publish the consultation by early October and finalise any scheme in time for people to start receiving compensation next — Financial Conduct Authority (@TheFCA) August 3, 2025 The UK's highest court ruled that car dealers did not have a relationship with their customers that would require them to act 'altruistically' in the customers' interest. FCA issues statement on car finance compensation scheme Nikhil Rathi, chief executive of the FCA, commented: 'It is clear that some firms have broken the law and our rules. It's fair for their customers to be compensated. 'We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal. 'Our aim is a compensation scheme that's fair and easy to participate in, so there's no need to use a claims management company or law firm. If you do, it will cost you a significant chunk of any money you get. What can fail an MOT test? 'It will take time to establish a scheme but we hope to start getting people any money they are owed next year.' Recommended reading: The FCA currently estimates that most individuals will probably receive less than £950 in compensation. If the compensation scheme goes ahead, the first payments should be made in 2026. The final total cost of any compensation scheme is currently estimated to be between £9 billion and £18 billion, the FCA added. The consultation will launch by early October.
The Guardian
3 hours ago
- The Guardian
‘It's a bit strange': the UK factory worker who beat the car lenders in court
Marcus Johnson never expected he would be rushing to a car park during a family holiday in Minehead to discuss a ruling by the highest court in the UK. But the 35-year-old factory worker from Cwmbran in south Wales also had little idea that a loan he took out in 2017 to buy a second-hand Suzuki Swift would place him at the heart of a David v Goliath battle. His case would go on to expose egregious commission practices in the car finance market and lead to a compensation scheme that could cost some of the UK's largest banks and specialist lenders up to £18bn. 'I thought it would be like when you did those PPI claim forms: you were just going to get a few pounds in the bank in a month or two. That's what I expected this to be,' Johnson said. 'I had no idea it would turn into what it has today; I had no idea the impact it would have.' What started as interest in a Facebook advert about potential misselling of car loans led to a three-and-a-half year legal battle escalating to the UK supreme court. On Friday, Johnson's case was the sole one of three consumer complaints left standing, with supreme court judges concerned about his 'unfair' treatment by car lenders. That was due in part to the size of the commission that the lender paid to the car dealer – a quarter of the Suzuki's near-£6,500 price tag – as well as a failure to disclose that a single lender, in this case South Africa's FirstRand, was given first dibs on the contract, rather than it being taken to a panel of lenders to secure the best deal. Johnson admitted he did not read all the documents that the Cardiff dealership gave him about the blue hatchback. But the supreme court questioned whether it was reasonable to expect 'commercially unsophisticated' borrowers to read and understand the terms of the commission buried in reams of fine print. 'It was a very rushed process where they gave me a big box full of paperwork and expected me then to comb through hundreds of pages,' Johnson recalls. 'I felt like they were telling me what I needed to know. I had no idea that they were leaving things out.' Once lawyers explained the terms of his loan, Johnson was floored. 'As all the evidence and all the information was presented, I almost found it unbelievable.' His case, which has dragged through Britain's legal system since November 2022, exposed the complex and symbiotic relationship between lenders, manufacturers and car dealers in the UK's multi-billion pound motor finance industry. Between 80% and 90% of new cars in the UK are now bought using borrowed money, with dealers paying commission to lenders. Had the two other cases bundled with Johnson's claim been upheld, the industry could have faced a massive compensation bill fit to rival the £50bn PPI scandal. Johnson, speaking during a trip to Butlins with his six-year-old daughter, said the entire saga had been stressful at times and pushed him out of his comfort zone. He even gets recognised on the street, thanks to doing TV interviews. 'I'm not shy, but I kind of keep myself to myself, so it's just a bit strange for me.' However, he feels it is a small price to pay to hold lenders to account. He said one car finance company reached out to him in recent months to ask how they could be more transparent with buyers. Johnson is hoping those changes last and that the regulator's new compensation scheme will give money back to consumers who were unknowingly overcharged. 'Hopefully it opens up a way for people in my position to be able to get what they should back. I would definitely do it all again.' Even Andrew Wrench, 61, who lost his case in the same court ruling on Friday, said it was worth the battle. Judges rejected Wrench's case, alongside another filed by nurse Amy Hopcraft, which argued commissions paid to car dealers amounted to bribes, and that dealers should be acting in customers' best financial interests. While it proved a disappointing end to his 26-month court battle, Wrench said family and friends were proud of his work. 'My nephew Billy said 'look, you've highlighted it. You've done the right thing. A lot of people respect you for that, and be proud of what you've achieved, because there are going to be some compensatory packages for consumers.'' While Wrench will not get a payout on that single claim, he acknowledged there could have been sweeping repercussions if his case was upheld. Car lenders have warned that a big compensation bill could push some firms into failure, while others would offer fewer, or more expensive loans, to claw back their losses. That could restrict options for people who relied on credit. Spooked by the warning, the chancellor, Rachel Reeves, subsequently launched a failed bid to intervene in the supreme court ruling, and warned judges to avoid handing a 'windfall' to consumers. Reeves later considered overruling the supreme court with retrospective legislation, in order to curb a potential £44bn bill. 'I didn't want anybody to lose jobs. I don't want the economy to be affected. And the Treasury is already in a mess anyway,' Wrench said. 'I wasn't in it for that and I wasn't in it for compensation at all. I was in, from the get-go, [to expose lenders] that were deceitful, dishonest and otherwise.' But Wrench's work is not over. He has one more car finance claim to pursue, and has two other unrelated cases – on mortgage terms and diesel emissions claims – making their way through the courts. In the meantime, he is keeping inspirational figures, such as the underdog lawyer and environmental campaigner Erin Brockovich, in mind. 'She risked everything to take on the big boys.'
