Supreme Court rules on car finance: latest

In a significant judgment for the nine in 10 people buying cars on finance the Supreme Court has seemingly ruled out a PPI-style compensation rush for drivers afraid they may have been over-charged on their monthly payments, except in very specific cases.
The ruling is complicated and full of carefully phrased legal nuance, but centres on what it describes as the three-way relationship between the person buying the car, the dealer supplying it and the finance company providing the credit, and on whom the responsibility lies for this being a fair deal. The exact implications will take a while to filter through but, in short, if you’re buying a car you’ll still be able to get finance and if you’re worried you might have been over-charged in the deal you’re on at the moment that is, in most cases, unlikely. But not impossible! We’ll get to the details in due course but keep reading for a sense of how we got here, and what it means for you. The investigation into car finance commission rates is ongoing, so we’ll keep this article updated with the latest information – that way you know what’s going on at all times. Skip to: What is the FCA and what is it going to do? How you can raise a complaint and get a response How much compensation will I get if I had car finance with discretionary commission? Am I ok to buy a car on finance now? Will this change how vehicle finance works? Was there discretionary commission all types of vehicles or just cars?

The Supreme Court judgement focuses on three consumers who argued that the car dealers, acting as brokers, failed to disclose commission payments and that affected the impartiality of the finance advice they gave. The Court of Appeal reviewed and the ruled in favour of the consumers while the more recent verdict from the Supreme Court has upheld one of these three claims.
Additionally, the FCA’s ongoing review of historical discretionary commission arrangements (DCAs) in motor finance is evaluating possible misconduct before they were banned in 2021, and whether consumer compensation is needed, though - confusingly - this is a different matter to that considered by the Supreme Court. This review's timeline and focus will be influenced by future court decisions. Back to top

The Financial Conduct Authority (FCA) is a financial regulatory body and conduct regulator for financial services firms and markets in the UK. It is investigating the issue using powers under the Financial Services and Markets Act 2000.
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If you feel you were unfairly charged under the discretionary commission arrangement, you’ll need to contact the firm that sold your car finance.
There is normally an eight-week deadline for providers to get back to you, but the FCA has extended this as part of its investigation, so providers won’t have to respond to a complaint about this sort of car finance arrangement until after 4 December 2025 - at the earliest. That doesn’t mean you shouldn’t investigate and complain though – they will have to get back to you at some point. If a response to your complaint is likely to be delayed by the FCA’s investigation, the provider must tell you. If you’re not satisfied with their final response, you can escalate your complaint to the Financial Ombudsman Service (FOS). There is usually a six-month deadline for filing complaints to the FOS, but this has been extended to up to 15 months for responses received between July 12, 2023, and November 20, 2024. On 30 July, the FCA recommended the deadline be extended further to July 29, 2026, or 15 months after the final response letter from the provider. So even though you’ll have to wait longer for a response from your provider, you’ll have longer to file your complaint to the FOS. Make sure you keep a record of any complaints you make, as this could be helpful for keeping track of what has been said and what you do next. The FCA have confirmed that you won’t be ‘blacklisted’ by a company for submitting a claim. No claims will be included in application assessments for future products either. Back to top

The FCA’s investigation is still ongoing, so it’s currently unclear who will be eligible for compensation, how much affected consumers could receive in compensation, or whether the FCA will order firms to pay compensation at all.
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Car finance is still available while this investigation is ongoing.
You may find brokers (retailers) advise you that they will receive commission, but remember, this is a common and legal way for brokers to make a living and, while discretionary commission arrangements have been banned, the FCA’s ban doesn’t cover all types of commission. Under the new rules, the retailer (acting as a broker) must confirm you’re paying commission. You’re well within your rights to ask how commission affects the final amount you pay. Whenever you look at a finance plan, you should make sure you can afford the monthly repayments and that you read and understand the terms and conditions. Take your time to research the types of finance available, how much you’d have to pay and when by, plus what would happen if you fell behind with payments. Ask the retailer any questions you have, and don’t rush into a decision. Back to top

The implications of the Supreme Court ruling will take some time to digest but, broadly, it has seemingly decided that apart from in one specific case dealers and finance providers were acting lawfully. So, basically, it will be business as usual. You may, however, find you are provided with more information regarding any commission or payments retailers or brokers involved in vehicle finance receive in order to help you make an informed decision.
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This issue affects any circumstance where finance, through a broker or dealer, that has a discretionary commission arrangement included in the contract has been used to acquire vehicles such as cars, vans, camper vans and motorbikes between 2007 and 2021.
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