If you took out PCP or hire purchase between April 2007 and November 2024, the UK Supreme Court’s 1 August 2025 decision and the FCA’s proposed industry-wide redress scheme could affect how your car finance claims are assessed and paid. This guide explains what changed, who’s likely to qualify, how much you might receive, and how to move fast with National Claims.
On 1 August 2025, the UK Supreme Court ruled on linked motor finance appeals about undisclosed commissions, clarifying when lenders and dealers created an “unfair relationship” under the Consumer Credit Act 1974.
The FCA then consulted on a motor finance consumer redress scheme (7 October–12 December 2025) covering agreements from 2007–2024, with the pause on complaint handling due to lift 31 May 2026. Average redress is widely estimated around £700 per agreement, though some drivers may receive more depending on interest and fees.
Overview of Test Cases and Industry Impact
The Supreme Court appeal involved three key cases: Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd, and Hopcraft v Close Brothers Ltd. These cases challenged how commission arrangements in motor finance were handled, particularly around disclosure to consumers. The Court of Appeal’s 2024 decision shook the industry, prompting lenders to set aside compensation funds and pause new motor finance deals.
Supreme Court Hearing
Given the high stakes, the Supreme Court fast-tracked the hearing. It spanned three days and included interventions from the Financial Conduct Authority (FCA) and the National Franchised Dealers Association. The FCA expressed concerns about the Court of Appeal’s interpretation but also warned against fully backing the lenders. This underlined the complexity of the case.
What Did the Supreme Court Decide?
Although a final binary ruling was unlikely, the Court reinforced the importance of transparency in commission disclosure. Both discretionary and non-discretionary commission arrangements came under scrutiny, especially for older agreements set before recent FCA reforms. The verdict holds major consequences for how historic claims are judged.
Timeline of Regulatory Changes
- March 2019: FCA highlights consumer harm from opaque motor finance commission structures.
- July 2020: Ban on discretionary commission arrangements (DCAs) announced.
- January 2021: DCA ban and new disclosure rules go live.
- July 2023: New Consumer Duty rules apply to all motor finance products.
- January 2024: FCA pauses complaint handling deadlines for DCA-related cases.
- July 2024: Proposal to extend complaint handling pause to December 2025.
Complaint Surge and FCA Action
By late 2023, over 10,000 car finance complaints had been referred to the Financial Ombudsman Service (FOS). Most related to mis-sold finance deals involving hidden or unfair commissions. In response, the FCA introduced temporary rules giving firms more time to respond while it assessed the scale of the issue.
Are you likely to be eligible?
You may have a claim if all or most of the following apply:
- You took out PCP or hire purchase on a car, van or motorbike between 6 April 2007 and 1 November 2024.
- A dealer or broker introduced you to the lender.
- You weren’t properly told about commission, or how it could affect the interest rate you paid.
- You paid a higher APR than you would have without the commission, or otherwise suffered detriment.
The FCA’s consumer page summarises how to check whether you’re affected and what to do next. The Financial Ombudsman Service also provides guidance on commission complaints.
Legal Developments Leading to 2025
In April 2024, Barclays Partner Finance initiated a Judicial Review after a FOS ruling against them. Meanwhile, the FCA worked on its review of historic commission arrangements. The FOS, facing thousands of open cases, paused decisions pending outcomes in the Court of Appeal and Supreme Court.
In October 2024, the Court of Appeal ruled that lenders must clearly disclose commission payments and gain informed consent from customers. This judgment led to a wider industry shake-up.
Redress Scheme & High Court Rulings
By March 2025, the FCA confirmed it would announce within six weeks of the Supreme Court judgment whether a redress scheme would be introduced. The High Court had already sided with the FOS in a key case, reinforcing consumer protections under the Consumer Credit Act 1974.
How Much Compensation Can You Claim?
The average refund could range from £1,000 to over £5,000, depending on:
- The size of the hidden commission
- The interest rate added to your finance
- The lender’s failure to disclose the commission clearly
Claims could be higher for those with multiple agreements or higher-value vehicles.
People Also Ask
1. Am I eligible for a car finance refund?
You might be eligible if you took out a car loan between 2007 and 2021 and weren’t told about commission payments made to the dealer.
2. What is a discretionary commission arrangement (DCA)?
A DCA allowed dealers to adjust your interest rate to increase their own commission – without your knowledge.
3. What did the Supreme Court rule in 2025?
It ruled that commissions must be fully disclosed, and failure to do so could make the finance agreement unfair.
4. How long do I have to make a claim?
Normally, within six years of the agreement or three years from when you realised something was wrong. Extensions may apply due to FCA pauses.
5. Can I claim even if my finance is paid off?
Yes, even settled agreements could be eligible for compensation if they involved undisclosed or unfair commissions.
Why Trust a Claims Management Company for Your Car Finance Refund?
Making a claim on your own can be stressful and time-consuming, especially with the legal and regulatory complexity. Claims management companies like National Claims are experts in these cases. They know exactly what evidence is needed and how to submit your claim effectively.
They deal directly with lenders and the FOS, saving you hassle. Best of all, you typically only pay if your claim is successful. National Claims can also connect you with experienced solicitors who specialise in car finance mis-selling.
Start Your Claim Today
If you took out car finance in the last 10–15 years and were not told about commission arrangements, you could be owed thousands. With the Supreme Court decision now setting a precedent, there has never been a better time to check your eligibility.
Contact National Claims today to start your refund journey. Our team will guide you through the process and help connect you with solicitors who specialise in car finance claims.
Don’t miss your chance to claim the compensation you deserve.
About National Claims
This article was written by the National Claims content team. Our specialists have years of experience helping people across the UK with personal injury, road traffic accident, and housing disrepair claims. We work alongside regulated solicitors to ensure our information is accurate, up-to-date, and genuinely useful for anyone seeking to understand their rights after an accident.
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