Compensation for mis-sold car finance could hit £18bn

A compensation scheme for drivers who were mis-sold car loans could cost as much as £18bn, the financial regulator has said.

- ALEX CROFT

Millions of drivers were denied payouts after the Supreme Court ruled on Friday that lenders are not liable for hidden commission payments in car finance schemes. Two lenders, FirstRand Bank and Close Brothers, challenged a Court of Appeal ruling that the “secret” commission payments paid to car dealers as part of finance arrangements made before 2021 - without the motorists’ fully informed consent - were unlawful.

After the Supreme Court’s decision the bulk of the claims will therefore not go ahead, with only the most serious claims eligible for compensation. The £18bn figure is a significant drop from the £45bn sum if the Supreme Court upheld the ruling in full.