The Court has spoken on commission disclosure - but the fight for fairness isn’t over

Today, the Supreme Court ruled in favour of lenders in a high-profile judgment into historic car finance commissions, with an exception in one case that was to do with highly specific circumstances. 

The judgment narrows the legal grounds for redress in cases where commission payments weren’t properly disclosed, but it doesn’t close the door on compensation where practices were clearly unfair.

Let’s be clear: this ruling doesn’t vindicate the way many finance deals were done in the past. It simply means that some consumers may now face a higher legal bar when seeking redress over non-disclosure of commissions.

But what the ruling doesn’t do is change the conversation about discretionary commission arrangements (DCAs) - deals where middlemen had the power to increase customers’ interest rates to earn fatter commissions.

The FCA has already called those practices “unfair and exploitative”, and has committed to a redress scheme for affected consumers. That should now move forward without delay.

Why this still matters

The reputational damage to the traditional car finance model is real, and justified. Consumers were too often left in the dark about:

• The fact that commission was being paid at all
  
  
• The scale of that commission
  
  
• The conflict of interest it created for brokers
  
  

The legal outcome doesn’t change the fact that transparency was lacking, and trust was broken.

Our stand at Carmoola

We founded Carmoola because we believed car finance could be fairer. That means no hidden incentives. No markups. No middlemen trying to make more money by giving you a worse deal.

Today’s ruling draws a line under some legal arguments. But the moral case - and the regulatory momentum - continues.

If you’ve been affected by a DCA, the FCA is expected to outline redress options within six weeks of the Supreme Court’s ruling. In fact, it has said it will announce its intentions to consult on such a scheme by Monday, 4th August, 2025. 

But if you simply want to know your next car loan is fair and transparent, that’s exactly what we’re here for.

Car finance court case Q&A: what's going on and what it could mean for you

What’s this court case all about?

The issue centres on customers who weren’t told that middlemen were earning extra commission from lenders when setting up their finance agreements.

The case tested whether these undisclosed commissions, sometimes referred to as “secret” commissions, were unfair. If so, millions of motorists could have been owed compensation.

So-called ‘discretionary commission arrangements’ (DCAs), which were already banned by the regulator in 2021, are a separate but related issue, and this ruling could impact how compensation claims for DCAs are handled. 

Why does this case matter?

The ruling could have a major impact, not only on the motor finance sector but on financial services more broadly. If the court had agreed with the customers - and the Court of Appeal - it could have opened the door to compensation claims affecting millions of people who used dealer-arranged car finance.

The Financial Conduct Authority (FCA) is already reviewing whether to introduce a redress scheme. Its decision, expected within six weeks of the judgment, could shape how compensation is handled across the industry.

How could this affect me?

If you financed a vehicle and weren’t clearly told that the dealer was being paid commission, you may be eligible for some sort of compensation but, based on the Supreme Court's ruling, the mere existence of commission is not grounds for a claim in and of itself. 

Even though the court backed the lenders, the FCA is still looking into how some types of commission were used in motor finance, particularly now-banned DCAs. So there may still be a route to compensation for those who took out vehicle finance pre-2021. 

Will I definitely get compensation?

Not automatically. It depends on the details of your finance agreement and the FCA’s response. If a formal compensation scheme is introduced, it should be easier for customers to claim than going through individual complaints or using a claims management company.

The FCA has said that any scheme would aim to be simple, fair and efficient, with the goal of helping customers keep more of any compensation they’re entitled to.

What does this mean for the car finance industry?

Since most cars in the UK are bought using finance, the decision could lead to significant changes in how the industry operates. One likely outcome is a much greater emphasis on transparency when it comes to commission.

Car finance plays a key role in people’s everyday lives, helping them get to work, care for family members and stay mobile. Regulators and lenders will be working to manage any disruption to the market.

The bottom line

This case is about making sure car finance agreements were sold in a fair and transparent way. 

At Carmoola, we have always kept things simple and upfront, so you always know exactly what you're signing up for.