Supreme Court ruling denies millions of car finance payouts

Decision narrows scope for compensation claims, but a compensation scheme for specific loans remains possible

Supreme Court ruling denies millions of car finance payouts
Image: Bigstock

A Supreme Court ruling has reversed earlier court decisions, meaning millions of UK motorists will be unable to claim compensation for hidden commissions on car loans. The UK’s highest court ruled in favour of finance companies in two of three key test cases, a move that limits the potential for widespread compensation on a scale similar to the PPI mis-selling scandal.

However, the decision does not eliminate all possibilities for payouts. Many drivers who took out a specific type of finance deal, known as a discretionary commission arrangement (DCA), could still be eligible for compensation. This now-banned practice, used in about four out of ten car sales before 2021, allowed dealers to earn higher commissions for securing loans at higher interest rates.

The Financial Conduct Authority (FCA), which has been investigating complaints about these arrangements, is considering a potential compensation scheme. The regulator stated it will “take time to digest the judgement” but aims to “bring greater certainty for consumers, firms and investors as quickly as possible.” The FCA expects to announce its plans for a consultation on a redress scheme by Monday, August 4.

Industry experts believe the potential for compensation related to DCAs could still be significant. Richard Barnwell of BDO suggested payouts could total £5-£13 billion or more if these arrangements are deemed an “unfair relationship.” Martin Lewis of Money Saving Expert echoed this, stating he would be “gobsmacked” if a scheme for DCA payments was not introduced.

While the ruling was welcomed by the Finance and Leasing Association as an “excellent outcome,” consumer rights groups called it “disappointing” and urged the FCA to act swiftly to introduce a redress scheme.

Source: BBC News

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>


The reCAPTCHA verification period has expired. Please reload the page.

Have your say!

0 0

Lost Password

Please enter your username or email address. You will receive a link to create a new password via email.