CAR FINANCE SCANDAL EXPLAINED SHOULD YOU GET COMPENSATION?

WITH BILLIONS OF POUNDS ON THE LINE, THE UK HIGHEST COURT HAS RULED IN FAVOUR OF LENDER, MEANING MANY CAR BUYERS WON'T RECEIVE ANY COMPENSATION AT ALL

- Tom Jervis

EX THE TV, radio and internet were dominated early this month by the ongoing car finance scandal.

Lenders have put aside billions of pounds in potential compensation for consumers, but the recent court ruling has shaken things up a bit, meaning fewer people could be eligible.

It now looks as if only those who had previously signed up to a finance deal involving a Discretionary Commission Arrangement (DCA), or potentially those whose finance agreement involved "excessive" levels of commission, will be able to claim.

Here we answer your questions and explain why the outcome may be more positive than it might seem.

WHAT DID THE SUPREME COURT RULE?

In early August, the UK's highest court, the Supreme Court, overturned a Court of Appeal ruling from 2024, which concluded that any part of a finance deal involving commission that's not overtly outlined and agreed to by the consumer is unlawful. The Supreme Court, however, revoked this, claiming that car dealers do not have a fiduciary duty to act in their customer's interest, rather than their own.

Lord Reed, the President of the Supreme Court, delivered the judgement, saying that "at no point did the dealer give any kind of express undertaking or assurance to the customer that in finding a suitable credit deal it was putting aside its own commercial interest as seller".

But the Court did uphold a ruling in which the amount of commission paid to a dealer was deemed excessive, accounting for as much as 55 per cent of what the customer had paid.

AMI OWED CAR FINANCE COMPENSATION?

Following the Supreme Court's judgement, the Financial Conduct Authority (FCA) said it would launch a consultation into a potential redress scheme for those having signed up to finance deals involving DCAs, as well as those including "non-disclosure of other facts relating to the commission that [made] the relationship unfair."