Car finance redress
On 1 August 2025, the Supreme Court ruled that undisclosed commission on car finance could make the lending relationship unfair, under section 140A of the Consumer Credit Act 1974. As the UK's highest court, its decision sets the framework every lender, the FCA and the Financial Ombudsman Service now follow.
Redress estimate
Any figures here are an estimate, not a promise, and nothing on this page is financial or legal advice. You can claim free yourself — you don't need a claims firm.
The car finance Supreme Court ruling of 1 August 2025 found that undisclosed commission could make a lending relationship unfair under section 140A of the Consumer Credit Act 1974. It did not order automatic payouts. Instead, it cleared the way for the FCA's redress scheme, finalised on 30 March 2026, parts of which have been suspended from 29 June 2026 while a legal challenge is heard.
What the ruling means for you depends on the facts of your own agreement. Any figure you see is an estimate, not a promise. Nobody is guaranteed a payout, and the amount depends on your own agreement. You can check your position with our compensation estimator. The rest of this page covers what the court decided, what it did not do and how it shapes redress.
What did the Supreme Court rule?
On 1 August 2025, the Supreme Court ruled that undisclosed commission on car finance could make the lending relationship unfair, under section 140A of the Consumer Credit Act 1974. As the UK's highest court, its decision sets the framework every lender, the FCA and the Financial Ombudsman Service now follow.
The case that decided this point (Johnson) turned on what the borrower was told about the commission paid to the dealer who arranged his finance. The commission was large, at 25% of the amount borrowed and 55% of the total charge for credit, and his documents did not reveal a commercial tie that gave the lender a right of first refusal. The court weighed those facts together with documents that suggested the dealer was choosing from a panel of lenders for him.
The court said that no disclosure, or only partial disclosure, of commission "will not necessarily suffice" on its own to make the relationship unfair; it is one factor in a broad, fact-sensitive assessment. In Mr Johnson's case the size of the commission, the hidden tie and misleading documents together tipped the balance. That is the legal foundation on which the FCA built its scheme, and it shapes how the Financial Ombudsman now decides individual complaints. The case was about car finance, not about every commission in every industry, and the judgment does not by itself set a fixed payout.
What the ruling means for you
The ruling makes a redress scheme possible, but it does not hand anyone an automatic payout. What you're owed, if anything, depends on the facts of your agreement.
Following the ruling, the FCA finalised a redress scheme on 30 March 2026 (PS26/3). The scheme covers agreements from 6 April 2007 to 1 November 2024 where commission was payable to a broker, and the FCA estimates it would deliver about £7.5 billion of redress across roughly 12.1 million agreements. Parts of the scheme have been suspended from 29 June 2026 pending a legal challenge, and payouts are expected in 2027 at the earliest, if the scheme is upheld and the judgment is not appealed.
You do not have to wait. You can still complain to your lender yourself, for free, now, and that complaint keeps running whatever the scheme's timing.
What the court did NOT do
Discretionary vs other commission
Not all commission is the same, and the scheme draws clear lines between the three types that count. The clearest concern is the discretionary commission arrangement (DCA), where the broker's pay rose with your interest rate.
The FCA tightened the eligibility rules between consultation and the final scheme (PS26/3). 0% and minimal-commission deals are excluded, because there was no commission-driven conflict to put right.
A DCA could flex your interest rate by several percentage points without you knowing. To put that difference in pounds over the full term, see what the APR really costs on a deal like yours.
- Discretionary commission (DCA): the rate, and the commission, could be flexed up. The FCA banned DCAs on 28 January 2021. Read more on what is a DCA.
- High-commission arrangement: a fixed commission that was still large (at least 39% of the total cost of credit and at least 10% of the loan) and not disclosed to you.
- Contractual tie: an undisclosed arrangement tying the broker to one lender, limiting your choice.
- Properly disclosed commission: clearly explained commission is much less likely to be a problem.
How the ruling feeds into redress
The court set the legal test; the FCA scheme turns that test into a structured process. Individual outcomes are then decided case by case by your lender, and on appeal by the Financial Ombudsman Service.
In practice, that means the scheme asks whether your agreement carried a DCA, a high-commission arrangement or a contractual tie that was not disclosed. If it did, redress is built around the interest you overpaid plus interest on top. The FCA's average estimate is about £829 per agreement, but roughly one in three qualifying cases is capped, and your own figure depends on your deal.
Any figure you see is an estimate, not a promise. Nobody is guaranteed a payout, and the amount depends on your own agreement.
| Who | What they do | Effect on you |
|---|---|---|
| Supreme Court | Set the legal test (unfair relationship, s140A CCA 1974) | Made an industry-wide scheme lawful |
| FCA (PS26/3) | Designed the redress rules and eligibility | Decides who qualifies and how redress is worked out |
| Your lender | Assesses your agreement and offers redress | First decision on your case |
| Financial Ombudsman | Reviews disagreements for free | Final, binding-on-lender decision if you accept |
Does it guarantee compensation?
No. The ruling does not guarantee anyone compensation. It set the legal test; the FCA scheme and the Financial Ombudsman Service decide individual outcomes case by case.
Any figure you see is an estimate, not a promise. Nobody is guaranteed a payout, and the amount depends on your own agreement. Be wary of anyone, especially a claims firm, who tells you a payout is certain. Whether the court's test is met depends on your own agreement's facts, not on a marketing slogan.
The legal challenge to the scheme
On 1 May 2026 the FCA confirmed the redress scheme had been legally challenged, and said it would defend it robustly as lawful. Parts of the scheme have since been suspended, from 29 June 2026, until the challenge is decided.
The challengers are CA Auto Finance, Mercedes-Benz Financial Services, Volkswagen Financial Services and Consumer Voice. The Upper Tribunal suspended parts of the scheme with effect from 29 June 2026 (the FCA announced this on 2 July 2026), and the hearing is listed for 16 February to 3 March 2027. Until the legal process ends, lenders do not need to calculate or pay redress. The outcome will affect when payments begin and whether they come through this scheme, a revised scheme or the normal complaints route. The Supreme Court's 2025 judgment on unfair relationships is not part of the challenge and still stands, and you can still complain to your lender for free. If the timeline changes again, we will update this page.
Keep perspective on the legal challenge
How section 140A of the CCA 1974 works
Section 140A of the Consumer Credit Act 1974 lets a borrower argue the relationship with the lender is "unfair" because of how the agreement was made, and ask a court (or, in practice, the ombudsman) to put it right. That's the legal lever the Supreme Court applied.
The test is deliberately broad. It doesn't require a specific breach like mis-selling. It asks whether, looking at the whole relationship, the borrower was treated unfairly, for example because a conflict of interest was hidden. Section 140B then sets out the remedies a court can order, including reducing what's owed or ordering the lender to pay back money.
What the Supreme Court added in Johnson was clarity on how the "unfair relationship" test applies to commission: no disclosure or partial disclosure "will not necessarily suffice" on its own, but it is a factor, and a very high undisclosed commission is "a powerful indication" of unfairness. It didn't set a fixed tariff. It confirmed the legal foundation on which the FCA then built a structured, industry-wide scheme.
Why s140A matters to you
The Johnson case in more detail
Johnson was the one appeal in which the Supreme Court decided the unfair-relationship question, and it turned on several facts together: a very large commission, a hidden tie between dealer and lender, and misleading documents. The court held that, taken together, these made the relationship unfair.
Mr Johnson took out hire purchase finance arranged by the car dealer, who received commission from the lender. The commission came to 25% of the amount borrowed and 55% of the total charge for credit. His documents did not reveal a commercial tie giving the lender a right of first refusal, and instead suggested the dealer chose from a panel of lenders. The Supreme Court said non-disclosure alone will not necessarily make a relationship unfair under s140A, but weighing these facts it held this relationship was unfair and ordered the commission repaid with interest.
The court didn't say every agreement with commission was unfair, or order a payout to everyone. It set the framework: where an undisclosed commission created a conflict, the relationship may be unfair, and the borrower is entitled to a remedy. The FCA's scheme then turns that framework into a practical process for millions of agreements at once.
Timeline of the scandal and ruling
The motor finance commission story runs from the FCA's market review in the late 2010s to the 2026 redress scheme. The table below lists the milestones that matter for your claim.
Reading the timeline in order shows where things stand. The 2025 ruling set the legal test, the March 2026 scheme turned it into a process, and the May 2026 challenge led to parts of the scheme being suspended until the case is decided. The ruling itself is not under challenge, and you can still complain to your lender for free.
| Date | What happened |
|---|---|
| 6 April 2007 | Start of the scheme window (earliest in-scope agreements) |
| 28 January 2021 | FCA bans discretionary commission arrangements (DCAs) |
| 2024 | FCA pauses complaint time limits while designing a scheme |
| 1 August 2025 | Supreme Court rules in Johnson under s140A CCA 1974 |
| 30 March 2026 | FCA finalises the redress scheme (PS26/3) |
| 1 May 2026 | Scheme legally challenged; FCA defends it as lawful |
| 29 June 2026 | Upper Tribunal suspends parts of the scheme (announced 2 July 2026) |
| 16 February to 3 March 2027 | Legal challenge to be heard; payouts expected in 2027 at the earliest, if the scheme is upheld and the judgment is not appealed |
| 31 August 2027 | Consumer deadline to complain if not contacted, under the rules as made (may change after the challenge) |
What the ruling does NOT entitle anyone to
Because the ruling is well known, it gets twisted in adverts. Treat the claims below with suspicion.
- 'The court ordered your payout': it didn't. It set the test; the scheme and the ombudsman decide individual outcomes.
- 'You're automatically entitled because of Johnson': Johnson set a framework, not a blanket payout; your facts decide it.
- 'Sign up or lose your Supreme Court rights': there is nothing to lose by complaining yourself, for free, on your own timeline.
- 'Only a firm can use the ruling for you': the free DIY route to your lender and the ombudsman uses the exact same legal foundation.
The ruling is not a voucher
Estimate your position
You can get a rough idea now, for free. Our estimator works from the basics of your agreement.
Use the compensation estimator, then read how the FCA scheme is expected to work. Claiming is free and you can do it yourself: complain to your lender first, then escalate to the Financial Ombudsman Service. You do not need a claims-management company taking a cut.
Frequently asked
What did the Supreme Court rule on car finance?
When was the ruling?
Does the ruling mean I'll get compensation?
What's the difference between a DCA and other commission?
Has the Supreme Court ruling been challenged?
What is section 140A of the Consumer Credit Act 1974?
Was Johnson the only case the court decided?
Does the ruling still apply if the scheme is challenged?
Sources
We cite regulators and official UK sources only.
- Financial Conduct Authority — motor finance redress schemefca.org.uk
- UK Supreme Courtsupremecourt.uk
- Consumer Credit Act 1974legislation.gov.uk
- Financial Ombudsman Servicefinancial-ombudsman.org.uk
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