The Supreme Court ruling is expected to be laid out this afternoon and the consumer champion said there are a few ways it could go
A Supreme Court ruling on the mis-selling of car finance is to be made today, August 1, with a ruling on hidden commissions expected at around 4.35pm. It is thought that their decision could impact the reach and scale of a compensation scheme launched by the Financial Conduct Authority (FCA).
And consumer champion Martin Lewis has shared three possible outcomes from the court in what could be a landmark ruling that will affect millions of motorists who have bought a vehicle on finance.
The Supreme Court heard the case in April, after car finance firms Close Brothers and Motonovo appealed against the Court of Appeal’s surprise ruling, made in October 2024, that all car finance agreements with hidden commission were unlawful, reports Birmingham Live.
The vast majority of new cars, around 90 per cent, as well as many second hand cars are bought using finance agreements.
And in October, the Court of Appeal made a ruling that could see £44 billion in compensation for millions of people. It ruled that motor finance firms were breaking the law by not telling borrowers about the sums and terms of broker commissions.
Speaking to the BBC, Lewis explained that the ruling from the UK’s highest court could go one of three ways today.
He said: “So in summary, on Friday, one of three things is likely to happen. First, the Supreme Court upholds the Court of Appeal ruling on commission disclosure arrangements.
“To be honest, that shakes everything up in the air, there may be political intervention, we don’t know when. If not many people with car finance, virtually all of them will be due a payout but we don’t know the scale.
“Second option, the Supreme Court rejects the Court of Appeal ruling in part or in full, in which case discretionary commission arrangement cases will still go ahead via the regulator as they were planned to.
“They could even launch a system where people don’t have to apply to get their money back if they were mis-sold. It might just tell firms they have to pay out automatically.
“The third one is the Supreme Court comes out with something novel and we just haven’t even prepared for that one. That’s my unknown unknown.”
In February the supreme court rejected an unusual intervention by the government, which was concerned that huge amounts of compensation payments could dramatically affect the car market, as per The Guardian.
A Treasury spokesperson said they want a fair decision that gives consumers proper compensation for their losses.
They added: “We want to see a balanced judgment that delivers compensation proportionate to losses that consumers have suffered and allows the motor finance sector to continue supporting millions of motorists to own vehicles. It is now appropriate to let the appeals process run its course.”
But Andy Agathangelou, founder of consumer advocacy group Transparency Task Force, slammed Rachel Reeves.
He said: “This is at least the second time the Chancellor of the Exchequer has hoped to intervene, or should I say interfere, with the judicial process surrounding the car finance scandal.
“It’s not a good look for her, because she seems happy to in effect take money out of the pockets of innocent, harmed consumers, and put it in the pockets of banks and car finance companies that have broken the law.”
