The Supreme Court motor finance ruling and hidden car dealer commissions
If you used finance to buy a car, motorbike or van between 6 April 2007 and 1 November 2024, you may be entitled to compensation. However, compensation is not automatic, and the Financial Conduct Authority’s scheme is currently subject to legal challenges that have delayed the original payout timetable.
The FCA estimates that 12.1 million agreements could qualify under its final rules. It expects an average payment of about £830 per eligible agreement and total redress of approximately £7.5 billion, assuming 75% of eligible customers participate.
What the Supreme Court decided
On 1 August 2025, the Supreme Court gave judgment in 3 linked cases: Hopcraft, Johnson and Wrench. The Court overturned the finding that car dealers generally owed customers fiduciary duties when arranging finance. As a result, the claims based on bribery and dishonest assistance failed.
However, Mr Johnson succeeded under section 140A of the Consumer Credit Act 1974. The Court found that his finance agreement created an unfair relationship. Relevant factors included the size of the commission, the lack of disclosure and the commercial relationship between the dealer and lender.
The ruling did not decide that every undisclosed commission was unlawful. Instead, it confirmed that particular commission arrangements and disclosure failures can make an agreement unfair.
Who could qualify under the FCA scheme?
The FCA published its final rules in March 2026. Agreements may be considered where the customer was not properly told about at least one of the following:
A discretionary commission arrangement that allowed the broker to adjust the interest rate to earn more commission.
A high commission worth at least 39% of the total cost of credit and 10% of the loan.
An exclusive or right-of-first-refusal arrangement between the broker and lender.
Low commissions, interest-free agreements and some arrangements where no financial loss occurred are excluded. Therefore, taking out finance during the relevant period does not by itself prove that you were mis-sold PCP finance.
Understanding how car dealers and brokers earn commission and whether your car finance commission was hidden can help you identify the issues that may apply.
What compensation could you receive?
Around 90,000 cases closely matching Johnson may receive repayment of the commission plus interest. Most other eligible customers would receive a calculation based on the average of the commission paid and the FCA’s estimate of financial loss.
Simple interest would then be added using the annual average Bank of England base rate plus 1%, subject to a minimum rate of 3% for any year. Compensation may be capped where the calculation would put the customer in a better position than if the agreement had been fair.
Has the payment timetable changed?
Yes. The scheme has been challenged by several parties. The FCA said in June 2026 that the challenge will delay payments and removed implementation dates from its consumer guidance until the timetable is clearer.
The FCA is still encouraging concerned customers to complain directly to their lender. Anyone who has already complained and received an acknowledgement does not currently need to submit the same complaint again.
Read about the car finance complaint process and the time limits for car finance complaints before acting.
Which agreements may be relevant?
The scheme can potentially cover regulated hire purchase, PCP and other qualifying motor finance agreements. Different considerations may apply to hire purchase mis-selling, PCP mis-selling and joint car finance agreements.
Claims involving car finance used for business purposes depend on the borrower and whether the agreement was regulated. Finance taken out by a limited company may not be covered in the same way as a regulated agreement held by an individual or eligible small partnership.
Frequently asked questions
Do I need my original finance agreement?
It is helpful, but it may not be essential. Gather any information you have about the lender, dealer, vehicle and approximate dates. Our guide explains the documents needed for a mis-sold car finance claim.
Does it matter if I no longer own the car?
No. Eligibility concerns the finance agreement and commission arrangement, not whether you still own the vehicle.
Will making a complaint affect my credit score?
Making a complaint does not normally alter your credit record. Existing missed payments, defaults or other account information are separate matters.
Start your car finance complaint
You can complain directly to your lender without paying a representative. Alternatively, Claim First offers a no win no fee car finance claims service for customers who want support reviewing and managing their complaint.
Start your mis-sold PCP finance claim today to find out whether your agreement may qualify.
