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News Updates

Since the mis-sold car finance scandal broke in 2024, there have been reports it could be as big as PPI. Moodys Rating Agency puts a potential compensation payout as big as £30BN.

mis-sold car finance

So let's get to the reasoning behind this and where we are today. 

In early 2024, 3 UK consumers took their respective car dealerships to Court, citing their vehicle finance agreements contained hidden commissions between the dealer and the finance company of which they were not made aware and inflated their monthly repayments. In short, they were paying off dealer commissions and not their vehicle loan as fast as they could have been.

This was also compounded by the addition of what is termed as "Discretionary Commission Arrangements" a deal between the dealer and finance company, allowing the dealer to set their own interest rate. At the time between 2008 and 2021 UK bank rates were at an all time low between 0.25% and 0.75% for years. Yet some vehicle sales agreements were set way above this, with some as high as 29%, fuelling the speculation of high hidden sales commissions. 

A decision by judges at the Court of Appeal has blown open an ongoing saga into hidden commission payments, with buyers possibly in line for payouts totalling billions of pounds.

But the higher Supreme Court has now agreed to hear an appeal against the decision.

While the initial investigations surrounded discretionary commission arrangements, which were banned in 2021, the Court of Appeal decision widened the scope to any car finance commissions.

The three judges unanimously agreed that it would be illegal for the lender to pay ANY commission to the dealer without the informed consent of the buyer.

In other words, customers should be clearly told how much commission would be paid, and agree to it, without those details being buried in the terms and conditions of the loan.

WHERE WE ARE TODAY AND OUR ADVICE

As of January 2025, we await the Supreme Court to sit and make a final judgement on the mis-sold car finance issue.

However, as of January 22nd 2025 Rachel Reeves (Chancellor of the Exchequer) has intervened and stated she will “advise” the Supreme Court on how to interpret the findings, trying to reign in another wave of mass consumer claims like the PPI scandal.

We at Claimline Legal UK feel this is a sensible move as £30BN is potentially at stake and could collapse the entire vehicle financing industry, which would not be beneficial to UK consumers or car dealerships.

Rachel Reeves cannot change consumer law, but where an injustice has been done, you are entitled to your money back!

OUR ADVICE

It is likely the Supreme Court will uphold UK consumer law, but with time and claim restrictions to protect the vehicle financing industry. Once they do this, we expect a wave of complaints heading towards dealerships and their finance companies.

Our advice is not to wait and make your claim with us now. Get in front of the queue and log your claim early. We are set up with modern tracking software and will ensure where applicable your claim is logged and tracked, and you need do no more.

In the meantime, we strongly encourage all consumers to lodge a claim with us and we will deal with it on your behalf.

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