Car finance scandal live: Supreme Court rules on compensation for millions in mis-selling case

Martin Lewis has said the Supreme Court’s decision means potential car finance refunds will now be far lower than first expected.

Posting on X, he said: “My assumption/guess is this will mean #CarFinance refunds will be in the £5bn to £15bn range now rather than the up to £45bn if #SupremeCourt had upheld all of it (and that’s before looking at the potential knock on to other financial services sectors).”

The financial watchdog has said it will confirm whether it will consult on a redress scheme for consumers with car loans before 8am on Monday 4 August.

A spokesperson for the Financial Conduct Authority (FCA) said: “We welcome that the Supreme Court has clarified the law and are grateful to the court for delivering the judgment after the market closed.

“It will take time to digest the judgment. We want to bring greater certainty for consumers, firms and investors as quickly as possible.

“We will be working through the weekend to analyse the judgment and determine our next steps.

“We said we would set out within six weeks whether we would consult on a redress scheme. But we want to provide clarity as quickly as possible.

“So, we will confirm whether we will consult on a redress scheme before markets open on Monday August 4.

“Our aims remain to ensure that consumers are fairly compensated and that the motor finance market works well, given around two million people rely on it every year to buy a car.

“If we do decide to propose a redress scheme, we’ll consult widely. In designing a redress scheme, as we have previously said, we will balance principles including fairness, timeliness and certainty.”

Marcus Johnson said that he was “dumbfounded” by the Supreme Court ruling.

He said: “It is obviously not OK, my case was successful, but it sounds like it’s fine to secretly overcharge customers for commission.

“The current financial agreement on my current vehicle in the contract – because I have looked through it all since that contract – is all completely clear.

“I don’t disagree with commission. I now understand that that is how the market works.

“My case was a case of it being so secretive.”

When asked how he felt when he found out the result of the Supreme Court case, he said: “It was surprise and sadness, because I was quite confident, just based on how I felt about it, the unfairness of what happened to me.

“I thought people looking at all the information would come to the same conclusion and I’m just dumbfounded.

“I feel terrible that people won’t be able to claim anything like I have.”

Marcus Johnson, one of three drivers whose case was involved in the Supreme Court appeal, said the ruling “does not sit right”.

Mr Johnson, then a factory supervisor, was buying his first car in 2017 and paid £1,650.95 in commission as part of his finance agreement with FirstRand for the Suzuki he purchased.

The 35-year-old, from Cwmbran in Wales, was awarded his commission and interest by the Supreme Court on Friday as it found he was the victim of an “unfair” relationship between the customer and the lender.

Following the ruling, he said: “It does not sit right with me at all, to be honest.

“I am obviously happy that my case was successful, but for so many other people that were also overcharged, I just don’t like the message it sends to the UK consumer.”

Mr Johnson said the commission was around 25% of the cash price of the car and that he was repaid this figure with interest after the Court of Appeal’s ruling in October, meaning he received “just over £3,000”.

He added that he would “steer clear” of hire-purchase agreements in future.

Kavon Hussain, the lawyer representing the two drivers whose cases were dismissed at the Supreme Court, said “transparency is key” for car finance loans, adding that he and his clients are “disappointed” in the justices’ decision.

Speaking outside the court, he said: “The lenders and car dealers now, if you go for a loan, usually on the first page they will say what the commission is that’s being paid to the brokers. They don’t hide it any more.

“In a sense, that’s some good that’s come out of this. They’re very keen to make sure consumers and even businesses know exactly how much commission they are paying.

“There has to be absolute transparency on the true cost of the loan. If there’s commission, make the client aware of it, don’t hide it somewhere on page 15.

“Transparency is key.”

Our Consumer Editor Sabrina Sahota explains:

Caroline Wayman, Global Head of Financial Services at PA Consulting, has said lenders may “breathe a sigh of relief” after the Supreme Court ruling on hidden car finance commissions, but added it is a “wake-up call” for the industry.

She said firms “should scrutinise any large, undisclosed commissions” and ask “whether it still feels justifiable or could be considered unfair — particularly if they haven’t disclosed commercial ties to the broker.”

“It won’t be enough to expect customers to have read and understood the fine print,” she added.

The FCA’s ongoing probe means “this issue doesn’t just go away,” and the regulator “will need to decide whether a proactive scheme is the right way to address any harm”, Ms Wayman said.

The ruling also “raises a broader question about where the law ends and where regulation begins.”

Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), said: “We are pleased with the Supreme Court’s decision in relation to the FCA’s motor finance review.

“As the consumer-facing part of the sector, NFDA wants to see the regulator act fairly to ensure that UK consumers receive a satisfactory result. This has been achieved today.

“As we move forward from this case, NFDA will continue to provide support to its members ensuring that the UK has a healthy and functioning motor retail market.”