Car Finance Commission Court Cases: What Happened and Where Things Stand

The short version: in August 2025 the Supreme Court ruled that car dealers do not owe customers a duty of loyalty when arranging finance, overturning most of the 2024 Court of Appeal decision. It also confirmed that a finance agreement can still be unfair if a large commission was not properly disclosed. The Financial Conduct Authority (FCA) has since set up an industry-wide compensation scheme, and parts of it are on hold while a tribunal hears legal challenges.

What were the car finance commission cases about?

When a dealer arranges finance for you, the lender usually pays the dealer a commission. Three customers took two lenders, Close Brothers and FirstRand Bank, to court, arguing that the commission on their agreements had not been properly disclosed.

Separately, the FCA had been investigating discretionary commission arrangements (DCAs). Under a DCA the dealer could raise the customer’s interest rate and earn more commission by doing so. The FCA banned DCAs in January 2021.

What did the Court of Appeal decide in October 2024?

On 25 October 2024 the Court of Appeal found in favour of all three customers. It said dealers owed their customers a duty of loyalty, so any commission paid without the customer’s fully informed consent was unlawful. That went much further than the industry or the regulator had expected, and the lenders appealed.

What did the Supreme Court decide in August 2025?

On 1 August 2025 the Supreme Court overturned most of that ruling. It held that a dealer is a seller with its own commercial interest in the sale, not the customer’s agent, so the claims based on bribery and a duty of loyalty failed.

One customer, Mr Johnson, still won. The court found his relationship with the lender was unfair under section 140A of the Consumer Credit Act 1974, because the commission was very large compared with the cost of the credit (around 55% of the total charge for credit) and neither its size nor the dealer’s tie to the lender had been properly disclosed.

What is the FCA compensation scheme?

After the Supreme Court ruling the FCA consulted on an industry-wide redress scheme and published the final rules on 30 March 2026. The scheme covers regulated motor finance agreements taken out between 6 April 2007 and 1 November 2024 where one of three things was not properly disclosed:

• a discretionary commission arrangement

• a high commission

• a tied arrangement between the dealer and the lender

When it published the rules, the FCA estimated an average payment of around £830 per agreement. Individual amounts will vary.

Where do things stand now?

Three lenders and the consumer group Consumer Voice have challenged the scheme at the Upper Tribunal. In summer 2026 the tribunal suspended the parts that require lenders to calculate and pay compensation. Lenders must still gather their records, handle complaints and tell customers who are not owed anything.

The full hearing is listed for either 14 to 18 December 2026 or 16 to 26 February 2027. The FCA says that if the scheme is upheld without a further appeal, payments are expected to begin in 2027. You can read the regulator’s latest position in the FCA statement on the partial suspension.

What should you do if you think you are affected?

• Complain directly to the lender that held your agreement. It is free.

• You do not need a claims management company or solicitor. The FCA warns that some charge more than 30% of any payout.

• If you are unhappy with the lender’s answer, the Financial Ombudsman Service is also free.

Our step-by-step guide is here: how to check and complain for free. If your finance was arranged through anycolourcar.com and you cannot find the lender’s details, call Customer Care on 01226 574321 and we will help you find them.

How is commission handled on car finance today?

Dealers have not been able to set your interest rate to increase their commission since January 2021. At anycolourcar.com we receive a commission from the lender for arranging finance, and we tell you that before you sign. We are a credit broker, not a lender. Read how we handle commission or see our finance options.

Common questions

Did the Supreme Court say all car finance was mis-sold?

No. It rejected the idea that every undisclosed commission was unlawful. Whether an agreement was unfair depends on the facts, such as the size of the commission and what the customer was told.

Is it only agreements before 2021 that count?

No. Discretionary commission ended in January 2021, but the scheme also covers undisclosed high commission and tied arrangements on agreements up to 1 November 2024.

When will compensation be paid?

Not before the Upper Tribunal has ruled. If the scheme is upheld, the FCA expects payments to start in 2027. If it is overturned, it could take longer.

This guide is general information, not legal or financial advice. Updated October 2026.