Finance commissions ruling - live updates
We'll continue updating our live blog with the latest developments on the finance commission disclosures as more information becomes available, ensuring Autotrader partners stay informed with real-time insights. In the meantime, check out our useful resources.
On the 7th October, 2025 - the FCA issued a statement to the market revealing its proposals for compensating up to 14 million car buyers (circa 44% of those made since 2007) eligible for mis-sold motor finance claims.
If adopted, the FCA expects to publish final rules and policy in early 2026, with the scheme launching shortly thereafter and consumer redress payments beginning later in 2026.
The key elements of the proposals are;
The FCA proposes a redress scheme for drivers who took out motor finance between 2007 and 2024 and were charged unfairly high interest rates due to undisclosed broker commissions, which could cost lenders up to £8.2 billion. The cost of administering the scheme could add another £3 billion to the industry's costs (I’ve seen conflicted numbers on the additional cost, but certainly over £2bn).
Around 14 million agreements could be affected, with average payouts of about £700 each.
The consultation runs until 18 November 2025, and final rules are expected in early 2026. Payments to consumers are expected to begin by the end of 2026.
Consumers who are concerned they weren’t told key details about their motor finance arrangement, for example, about commission payments, are urged to complain to their lender now if they haven’t done so already. Those customers who had not complained will be contacted by their lender within six months of the scheme starting. Consumers do not need to use a claims management firm, said the FCA, and can do so by downloading a letter template from its website.
The scheme aims to make getting compensation simpler, faster, and free, avoiding lengthy court cases - consumers can choose not to take part in the FCA’s compensation scheme and instead go to court, where they may get more or less compensation, based on the facts of their case. However, the outcome of a court claim is uncertain and accounting for legal fees they may pay, many consumers could end up with less. The FCA’s scheme is also likely to be faster and simpler than going to court.
Consumers who already complained will be automatically included unless they opt out; others will be invited to opt in when contacted by their lender.
The FCA will monitor if firms are meeting the proposed scheme’s rules and will act if they’re not. If people disagree with their firm’s decision, the Financial Ombudsman will be on hand to assess whether the scheme rules have been followed.
People will only receive compensation under the scheme proposed if they weren’t told details of at least one of three arrangements between the lender and the broker who sold the loan, often a car dealer, which are found in some motor finance agreements:
A discretionary commission arrangement, which allowed the broker to adjust the interest rate the customer would pay to obtain a higher commission
A high commission arrangement (35% of the total cost of credit and 10% of the loan)
A contractual arrangement or tie between the lender and broker, which provided exclusive or near exclusive rights to lenders to provide credit.
Nikhil Rathi, chief executive of the FCA, said: "Many motor finance lenders did not comply with the law or the rules. Now we have legal clarity, it’s time their customers get fair compensation. Our scheme aims to be simple for people to use and lenders to implement. We recognise that there will be a wide range of views on the scheme, its scope,
timeframe and how compensation is calculated. On such a complex issue, not everyone will get everything they would like. But we want to work together on the best possible scheme and draw a line under this issue quickly. That certainty is vital, so a trusted motor finance market can continue to serve millions of families every year.”
The FCA's consultation is now open to the wider motor industry. You can contribute here.
Finance commissions ruling webinar
Following the Supreme Court Ruling - we hosted an exclusive expert panel webinar featuring Jo Davies from Auxillias, David Betteley from Asset Finance Connect, and Ian Plummer from Autotrader, who together deconstructed the announcement and provided crucial insights into what this ruling means for retailers, brokers, lenders, and the broader automotive industry.
You can watch this discussion by clicking the button below.
Supreme Court’s ruling on finance commissions - your questions answered
During the webinar, we received many questions from our audience, and we answered the most frequently asked ones in this FAQ blog. Check it out to find answers to the questions in the following themes:
Redress scheme
How to sell finance now
FCA rules
Wider implications of the ruling
Current lender status
Following the Supreme Court judgment, no lenders or brokers have stopped or paused lending activity. As we gain further clarity, we will share any relevant lender and broker updates here
What are the two types of car finance mis-selling cases currently being discussed?
Discretionary commission arrangements (DCAs).
This applies to about 40% of car finance deals, and is where brokers and dealers could increase the amount of interest they charged customers (without telling them) on Personal Contract Purchase (PCP) and hire purchase agreements up to 2021. If they did so, they got increased commission.
This is NOT the case the court the court ruled on
Commission disclosure complaints
This IS the decision the Supreme Court ruled on.
Last year, the Court of Appeal shocked many, including the regulator, the lending industry and politicians by ruling that if car finance agreements didn't tell consumers all details of commission, including the amount, in a clear and obvious way, not just buried in the small print of the finance paperwork, they were acting unlawfully.
This applies to up to 99% of car finance (so all those with DCA cases as well)
What was the outcome?
The Supreme Court ruled on three associated cases. 2 appeals were upheld (meaning the lenders were successful in their appeal and the consumers’ cases were dismissed). A third, was dismissed, meaning the Court ruled in favour of the consumer.
The issues assessed by the Supreme Court were:
Did a lack of commission disclosure constitute a bribe?
Does a retailer have a special responsibility to the consumer to act in their best interest (fiduciary duty)?
Was the amount of commission paid for a particular deal considered fair?
The outcome was as follows:
Fiduciary duty: It was found that retailers do not owe a fiduciary duty to a consumer. This means that a retailer is not obliged to act solely in the consumer’s interest.
Bribery / secret commission: because of the above finding, this claim is rejected as there is no legal basis for it.
One of the claims (Johnson vs. FirstRand), made under the Consumer Credit Act, was upheld, with the Court ruling that the size of the commission paid was unfair.
The Court pointed out that their judgment was based on the facts of this specific case.
Although the consumer was presented with the information at the time, this was not deemed sufficient.
Will lenders pause trading again?
We haven’t seen any sign of this so far, with lenders continuing business as usual for now.
In October, when the original Court of Appeal judgment was handed down, we saw a number of lenders pausing business in the immediate aftermath as they understood the ramifications on their processes. They’d just been told that the way in which they’d been selling finance (via retailers) was unlawful, so it stopping this was a logical thing to do.
Could some lenders go out of business?
This still remains uncertain until the full details of the redress scheme are known.
Useful resources
This section will be updated as more resources become available.
Autotrader Monthly Finance Insight July 2025 - here
Supreme Court ruling webinar (6th August) – Catch up here
Post-Supreme Court ruling FAQs answered - here
Post-Supreme Court checklist for dealers from Auxillias - here
The Supreme Court's decision overview from Auxillias - here
Supreme Court Announcement (1st August) – link here