01 Aug 2025, 12:25
The Court Rules on How to Compensate Drivers for Fraud with Financed Cars
- The Supreme Court will decide whether the "hidden" commissions in financing agreements for cars are legal.
- Millions of drivers may receive compensation for fraud with financed cars.
- The FCA plans to create a compensation scheme for affected drivers.
On Friday, September 1, 2025, the Supreme Court of the United Kingdom will announce a ruling regarding a case involving £44 billion linked to fraud in financed cars. The court must determine whether the "hidden" commissions paid to car dealers, which were not disclosed to consumers, are legal. This could provide millions of drivers the opportunity to file compensation claims.
The ruling of the Supreme Court will be the result of a verdict from the Court of Appeal, which in July 2024 recognized that commissions that are not disclosed to consumers are illegal. Two creditors, FirstRand Bank and Close Brothers, are contesting this ruling, asserting that it is "absurd".
According to FCA data, up to 90% of new cars in the United Kingdom are purchased through financing agreements. If the court upholds the Court of Appeal's ruling, this could lead to significant payouts for consumers.
The Financial Conduct Authority (FCA) plans to create a compensation scheme for drivers who were misled when purchasing cars. The scheme is set to include agreements made until January 2021, when commissions that depend on percentage rates were banned.
However, if the court upholds the creditors' ruling, this may substantially limit the scope of compensation. The FCA confirmed that it will announce within six weeks of the ruling whether a compensation scheme will be established.
Tags: Europe/Economy