Last month I said we were finally nearing the end of the motor-finance commission saga. Last Friday’s Supreme Court decision has given us more clarity, but unfortunately the matter is unlikely to conclude before next year.
On 1 August 2025, the UK Supreme Court overturned most of a 2024 Court of Appeal ruling that had suggested car dealers owe consumers a fiduciary duty and had unfairly concealed commissions. It ruled instead that dealers do not owe a fiduciary duty, and most commissions were lawful.
However, it upheld one claim by the borrower (Johnson), whose dealer received a commission of £1,650, approximately 55 % of the interest charged. The Supreme Court deemed that his relationship with the lender was unfair due to the high level of commission and the dealer having only proposed the deal to one lender. In the other two cases, the commission earned by the dealers was approximately 3 % and 7 % of the interest charged. It is therefore no real surprise that the Court concluded that the Johnson deal was unfair.
As a result, the feared £44 billion redress bill has been dramatically scaled back, though consumers and regulators acknowledge that some compensation is still warranted, which is understandable.
On 3 August 2025, the Financial Conduct Authority (FCA) announced it will launch a public consultation by early October 2025 to design a redress scheme for affected motor finance customers. If you have any strong views on the matter, then make them known to the FCA.
The FCA’s plan will cover deals dating from 2007 up to 2021, particularly focusing on Discretionary Commission Arrangements (DCAs), and it will also focus on non-discretionary commission arrangements where it believes the relationship was unfair, such as commissions representing a significant percentage of the interest charged.
The FCA expects most individuals will receive less than £950 per agreement, typically the full amount of commission paid plus modest interest (around 3 % per year). I am sure there will be further explanations when the consultation is published as to how they have arrived at these figures.
The FCA emphasises the scheme will be simple and consumer-friendly, discouraging the use of claims-management companies, which may take up to 30 % of any payout. However, the FCA made no mention of Martin Lewis’s conduct in this matter, which clearly overloaded the Financial Ombudsman Service with thousands of unwarranted complaints.
Final redress rules are expected to be in place so that payments can start in 2026. As always, Lawgistics will keep you updated as and when we have any further news on the subject. You can read the FCA press release.
If your dealership is concerned about commission structures or potential liability, call our Lawgistics Helpline for tailored advice.
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