Supreme Court rules against compensation for hidden car finance commissions

In the United Kingdom, on Friday, August 1, 2025, the Supreme Court delivered a ruling concerning hidden commissions paid to car dealers as part of car finance arrangements. This decision followed challenges from FirstRand Bank and Close Brothers against a prior Court of Appeal ruling which had mandated compensation for drivers who were not adequately informed about commission payments on hire-purchase agreements signed before 2021. The earlier ruling had been based on findings that the commission arrangements lacked transparent consent from the motorists, which was deemed unlawful. During the Supreme Court hearing in April, the lenders argued that the initial decision represented a severe error. They received support from the Financial Conduct Authority, which intervened to assert that the appeals court's decision overreached. Lord Reed, summarizing the Supreme Court's ruling, stated that although the lenders' appeals were accepted, exceptions existed, as in the case of motorist Marcus Johnson, whose claims about unfair treatment were upheld and compensated. Ultimately, only Johnson was awarded compensation, with the other claimants' requests dismissed. Following the ruling, Martin Lewis, a well-known consumer advocate, urgently advised motorists to refrain from immediate action regarding joining claims firms. He urged drivers to wait for potential consultation from the FCA, which might introduce a redress scheme for discretionary commission cases. Lewis expressed concern about individuals potentially giving portions of their compensation to claims firms without any substantial benefit. He encouraged motorists to be patient and share this advice widely. The implications of this ruling suggest that millions of motorists may miss out on potential compensation related to car finance agreements prior to 2021. As the situation evolves, it stands to potentially reshape the landscape of car financing and consumer rights in the UK. Further guidance from regulatory authorities regarding commission policies is anticipated, possibly affecting future claims and consumer awareness around car financing.