Supreme Court to rule whether millions of motorists are due car finance compensation – live updates

Kevin Peachey
Cost of living correspondent

Image source, Getty Images

The vast majority of new cars, and many second-hand ones, are bought with finance agreements where customers pay an initial deposit, then a monthly fee with interest.

Two accusations of mis-selling have raised the possibility of wide-scale compensation schemes. The first, the narrower of the two, is not the primary focus of today’s judgement.

It’s related to a decision by the City regulator, the Financial Conduct Authority (FCA), in 2021 that banned deals in which the dealer received a commission from the lender, based on the interest rate charged to the customer.

These were known as discretionary commission arrangements (DCAs).The FCA said this provided an incentive for a buyer to be charged a higher-than-necessary interest rate, leaving them paying too much.

The FCA is currently considering whether compensation should be paid to people with these deals agreed before 2021, but an announcement on that is on hold until after today’s judgement, and is now expected within six weeks.

And that takes us to the second accusation of mis-selling – which is at the heart of today’s judgement.

The Supreme Court is effectively examining whether a much broader range of hidden commission payments – paid to car dealers by the lenders – are unlawful.