If you took out car finance between the mid-2000s and when rules changed, this ruling could affect you — and it may mean money owed because commissions weren’t properly disclosed. Check whether your agreement included undisclosed commissions or unusually high rates; if it did, you might qualify for compensation.
The article explains who is likely to be owed money and walks through the practical steps to check eligibility, gather documents, and pursue redress or wait for a regulator scheme. It also flags which cases won in court and which did not, so they can focus on the deals that matter most.
Who May Be Owed Car Finance Compensation
Many drivers who took out motor finance between 2007 and 2024 may be affected. The main issues are hidden commissions paid to dealers, how those commissions were disclosed (or not), and whether the lender’s conduct created an unfair relationship.
What the Supreme Court Ruling Means for Motorists
The Supreme Court decision narrowed which legal arguments succeed in court, but it did not close the door on redress from the regulator or on claims based on other legal grounds. Motorists who were charged higher interest because a dealer received undisclosed commission can still be in scope for regulatory redress even if the Supreme Court limited certain litigation routes.
That ruling followed earlier Court of Appeal decisions and affects claims that rely on proving a lender’s liability for hidden commission payments. It changes the likely outcome of individual lawsuits, but the Financial Conduct Authority’s planned redress scheme targets systemic harms in the motor finance market rather than individual court tests.
How Discretionary Commission Arrangements Worked
Discretionary commission arrangements (DCAs) were contracts where dealers set a margin above a lender’s baseline rate and kept part of that margin as commission. A customer might have been quoted an interest rate that included dealer commission, with no clear disclosure of the extra payment to the dealer.
In practice: the dealer negotiated the rate at point of sale; finance companies like Close Brothers, MotoNovo and others supplied funding; and customers paid the higher interest. If a DCA was used and not disclosed, the FCA treats that as a market distortion that could qualify for compensation under its mass redress plan.
Key Dates and Types of Car Loans Affected
The FCA’s proposals and media reporting focus on agreements from April 2007 through November 2024. Primary affected products are Hire Purchase (HP) and Personal Contract Purchase (PCP) deals.
Important timeline points:
- April 2007: start of FCA look-back window in proposals.
- 2007–2024: period where many DCAs and other hidden commission practices were common.
- November 2024: cut-off referenced in regulator materials.
Types of finance in scope: HP, PCP, and similar point-of-sale motor loans. Excluded: hire agreements and some non-credit arrangements depending on contract form and consumer protections under the Consumer Credit Act.
Why Only Some Drivers Qualify for Payouts
Not every motor finance customer will qualify. Eligibility hinges on whether the agreement falls into defined mis-selling categories: DCA involvement, contractual tie arrangements, or commission that was unfairly high.
Practical limits include record retention — many firms deleted old files — and the regulator’s chosen assessment method, which proposes formulaic redress rather than case-by-case full recalculation of interest. The Supreme Court decision also means some legal claims for full recovery of commission will be harder. Motorists with clear evidence (old statements, agreements showing finance type) or those who already raised complaints are far more likely to be identified and paid under any FCA scheme.
How to Check If You Qualify and What to Do Next
Start by gathering your paperwork: the finance agreement date, lender and dealer names, and any letters or emails about the deal. Know the approximate date you bought the vehicle and whether the dealer arranged the loan.
Simple Steps to Check Your Eligibility
They should first check if the agreement is between 6 April 2007 and 1 November 2024, because most eligible deals fall in that range. Look at the agreement type — hire purchase, PCP and similar retail car finance are usually covered; Personal Contract Hire (PCH) is not.
Search bank statements or emails for the lender’s name. If the provider is unclear, contact the dealer or check a recent credit file for the creditor. Record the agreement date, vehicle registration, and any paperwork showing the interest rate you paid.
If they suspect a discretionary commission arrangement (DCA), a high commission rate, or a tied arrangement that wasn’t disclosed, that increases likelihood of eligibility. They can also use public tools such as guides from Money Saving Expert and Martin Lewis to confirm next steps and get templates for a complaint.
The Role of the FCA and Redress Scheme
The Financial Conduct Authority (FCA) reviewed commission practices and concluded many customers were not properly told about broker commissions. After the Supreme Court ruling, the FCA proposed a compensation scheme to handle large numbers of claims and standardise payouts.
Under the proposed scheme, lenders will assess agreements and write to customers explaining how to join. If a case is included, firms will calculate redress and interest. The FCA expects an average payout figure discussed publicly (around several hundred pounds), though individual amounts vary by agreement.
Consumers who have already complained should keep their complaint reference. If a lender confirms inclusion in the scheme, the case will be assessed unless the customer opts out. If unhappy with the result they can still go to the Financial Ombudsman after the scheme decision.
Avoiding Claims Firms and Other Pitfalls
They should avoid signing up with claims management companies (CMCs) before checking eligibility themselves. The FCA and Money Helper warn that CMCs can charge up to 36% (including VAT) of any compensation, reducing a claimant’s payout significantly.
If someone has already signed with a CMC and wants to stop, they should read the contract carefully and ask for cancellation terms; any fee should reflect work already done. Watch for scammers contacting people with unsolicited offers of compensation — the FCA will never ask for bank PINs or upfront payments.
Keep all communications in writing. Use a simple complaint template and send it to the lender directly. That preserves timestamps and avoids unnecessary fees while the FCA finalises the redress scheme details.
Expected Timelines and What Happens Next
The FCA has outlined a likely timetable: the scheme begins early 2026, lenders write within months of launch, and consumers typically have a limited window to join. If a complaint was already made, firms may contact customers sooner — within three months of scheme start in some cases.
Once included, a lender should confirm whether compensation is due within about three months, then allow a short objection period before payment. Interest on any redress is likely to be added from the date of over-payment to the payout date at a restrained rate set by regulators.
If a provider doesn’t contact them, claimants normally have up to a year from scheme start to make a claim. Keep complaint acknowledgements and final responses; those documents define deadlines for taking matters to the Financial Ombudsman.
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