Martin Lewis has given drivers an update over the car finance scandal, suggesting that it has the potential to result in a payout of billions of pounds. As the Supreme Court begins a three-day hearing over whether to overturn the Court of Appeal’s ruling that all car finance agreements that featured a hidden commission were unlawful, the financial advice service Money Saving Expert has offered predictions over what the outcome may be. In a blog post on the website from April 1 2025, Martin highlighted that it is most likely that the Supreme Court will overturn the previous ruling.
He said: “Most likely outcome: many expect the Supreme Court to overturn the Court of Appeal ruling on Commission Disclosure complaints. If that happens then the redress scheme will only be set up for DCA [Discretionary Commission Arrangements] complaints. This is still huge, and the fact the payouts will be automatic means it would reach more people and likely be in the low billions to £10 billion (depending on payout size).”
In January 2024, the FCA launched an investigation into car financers who included hidden DCAs in their policies, allowing brokers and dealers to increase the interest rates they offered to earn more commission without the customer’s knowledge.
After more than 2.5 million motorists made complaints via the free tool on the Money Saving Expert website, a landmark Court of Appeal verdict ruled that car sales firms could not lawfully receive commission from finance companies without the customer’s ‘fully informed consent’.
However, following the ruling, the finance firms Close Brothers and Motonovo made an appeal to the Supreme Court, which is currently underway.
Whilst Martin noted that it is likely that the Supreme Court will overturn the Court of Appeal’s ruling, he also explained that there is still a possibility that it is upheld, with a much wider payout with similarities to the PPI scandal.
He added: “If the Supreme Court upholds the Court of Appeal ruling, then the FCA would set up a redress scheme for all car finance (well, the 99% affected by this).
“This would be huge, have impacts on the economic competitiveness, and could be at PPI scales of redress, running possibly into the £10s of billions. If so, it is not impossible we would see the Government intervene with legislation.”
Nevertheless, Martin also highlighted that there is still the risk that motorists affected by DCAs when financing a car will not receive any compensation.
The financial expert suggested that, if the Supreme Court rule out the Commission Disclosure complaints and cause the FCA to rethink whether the complaints were justified, it could result in no redress taking place. Nevertheless, Martin said that this is a particularly unlikely outcome.
In the meantime, drivers were informed that they will likely receive a letter from the lender they used to finance a vehicle if they were affected, but encouraged motorists to put in a complaint via their website in the meantime.
