Millions of motorists could be entitled to compensation on their hire-purchase agreements, as a Supreme Court ruling is set to decide on Friday.
In October last year, the Court of Appeal ruled that âsecretâ commission payments to car dealers as part of finance arrangements made before 2021 without the motoristâs fully informed consent were unlawful.
The outcome of the ruling could have major consequences for the industry, with the FCA telling the Supreme Court last year that almost 99 per cent of the roughly 32 million car finance agreements entered into since 2007 involved a commission payment to a broker.
Three drivers, Marcus Johnson, Andrew Wrench and Amy Hopcraft, all used car dealers as brokers for finance arrangements for second-hand cars, all worth less than ÂŁ10,000.
In each case, the car dealer made a profit on the sale of the car but also received a commission from the lender for introducing the business to them â which the three claimants argued they did not know about.
Two lenders, FirstRand Bank and Close Brothers, took the row to the Supreme Court, arguing that the decision was an âegregious errorâ.
Lords Reed, Hodge, Lloyd-Jones, Briggs and Hamblen are due to hand down their ruling at 4.35pm on Friday.
Court ruling could have major impact on car and finance industry
The outcome of the ruling could have major consequences for the industry, with the FCA telling the Supreme Court last year that almost 99 per cent of the roughly 32 million car finance agreements entered into since 2007 involved a commission payment to a broker.
The three drivers who brought the court action, Marcus Johnson, Andrew Wrench and Amy Hopcraft, all used car dealers as brokers for finance arrangements for second-hand cars, all worth less than ÂŁ10,000.
Only one finance option was presented to the motorists in each case, with the car dealers making a profit from the sale of the car and receiving commission from the lender.
The commission paid to dealers was affected by the interest rate on the loan.
The schemes were banned by the FCA in 2021, with the three drivers taking legal action individually between 2022 and 2023.
Holly Evans1 August 2025 12:46
What is the background to the court case?
The Supreme Court â the UKâs highest court â is considering an appeal against a Court of Appeal ruling made in October last year, relating to three claimants who had each bought cars on credit.
In each case, the car dealer made a profit on the sale of the car but also received a commission from the lender for introducing the business to them â which the three claimants argued they did not know about.
The Court of Appeal found that âsecretâ commission payments, as part of finance arrangements made before 2021 without the motoristâs fully informed consent, were unlawful.
The lenders, FirstRand Bank and Close Brothers, are challenging that decision.
Holly Evans1 August 2025 12:32
