Supreme Court ruling limits payouts
On Friday the UK Supreme Court ruled in favour of lenders in two of three test cases, significantly reducing potential compensation in the car finance scandal.
The decision overturned a Court of Appeal ruling that deemed hidden commission payments to car dealers unlawful, which could have led to £44bn in payouts – rivalling the PPI scandal.
The Financial Conduct Authority (FCA), set to announce its position today, August 4, is focusing on discretionary commission arrangements (DCAs), banned in 2021, where dealers inflated interest rates for higher commissions.
Around 40% of pre-2021 car finance deals involved DCAs, and the FCA plans to consult on a redress scheme within six weeks, potentially compensating affected drivers with £5bn-£15bn.
Lenders like Lloyds and Close Brothers have reserved over £2bn for claims.
Consumer advocates, including Martin Lewis, urge drivers to file complaints now, especially for pre-2021 deals, to secure potential payouts.
