Car finance: Martin Lewis urges drivers make DIY compensation complaint claim after UK Supreme Court ruling
You could be due hundreds if you took out car finance before 2021 🚗
- Millions who bought cars on finance between 2007 and 2021 may be owed compensation
- The FCA is planning a redress scheme worth up to £18bn after a Supreme Court ruling
- Hidden commission deals made some car loans more expensive without customers knowing
- Most payouts will likely be under £950 – and there’s no need to use a lawyer or claims firm
- Drivers are being urged to complain now if they believe they weren’t told about dealer commission
Millions of drivers who bought cars on finance between 2007 and 2021 could be owed compensation, potentially hundreds of pounds each.
The news comes after a landmark Supreme Court ruling on Friday (August 1), and an official crackdown on unfair commission deals.
The Financial Conduct Authority (FCA) has announced plans to consult on a redress scheme that could see affected customers receive a share of up to £18 billion.
The issue stems from “discretionary commission arrangements”, where lenders allowed car dealers to set their own commission, creating incentives to sell more expensive loans, often without telling the buyer.
While not all commission payments were illegal, the court found that failure to clearly disclose these arrangements could be deemed unfair – and therefore unlawful.
What’s happening?
Between 2007 and 2021, many car dealers earned hidden commissions from lenders when arranging finance for customers. In some cases, they had discretion over how much commission to charge, incentivising more expensive loans for the customer.
The Supreme Court has now ruled that in certain cases, not telling customers about this was unlawful. The FCA says some firms broke the law or breached its rules, and that customers deserve compensation.
The FCA will launch its consultation by October 2025; if the scheme goes ahead, the first payments could arrive sometime in 2026.
In the meantime, the FCA recommends customers who are concerned should complain directly to their lender or broker now.
Could I be owed money?
According to consumer champion Martin Lewis, up to 40% of people who financed a car during the period could qualify.
Most payouts will likely be under £950, the FCA says – but the overall cost of compensation could hit £18 billion.
You don’t need a lawyer or claims firm to make a complaint, and using one could cost you 30% of your payout.
The FCA says it will propose rules on how lenders should fairly and consistently decide whether someone is owed money, and will monitor compliance closely.
In the meantime, motorists are being encouraged to submit a DIY complaint if they believe they overpaid.
Lewis adds: “There’s no harm in putting a DIY complaint now to see if you had a Discretionary Commission Arrangement.”
How can I claim compensation?
- Check your deal: Did you take out car finance between 2007 and 2021? If so, you could be affected.
- Contact your lender or broker: Ask if your deal involved a discretionary commission arrangement and raise a complaint if you believe you weren’t told.
- Don’t pay for help: The FCA warns that using claims firms or lawyers could eat up to 30% of your potential payout.
- Be patient: Your provider must acknowledge your complaint within eight weeks, but may delay a final response until after December 2025 due to the ongoing consultation.
- Escalate if needed: If you’re unhappy with the response, you can take your case to the Financial Ombudsman Service.
The FCA plans to launch its consultation by October 2025, with the first payouts potentially landing in 2026 if the scheme is approved.
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