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UK Supreme Court Decision on Car Finance Claims: The £11 Billion Truth They Don’t Want You to Know

The Supreme Court Judgment Is Out – But It’s Not What You Think

The UK Supreme Court delivered the final court judgment on the car finance scandal on Friday 1 August 2025, and if you’ve been reading the headlines, you might think it’s game over for car finance claims after the Court of Appeal decision was overturned in part. But here’s the truth: the door is far from closed.

The Supreme Court rmade its final ruling after markets closed on Friday afternoon. Lord Reed, the Supreme Court President, announced they’d deliberately chosen this timing on advice from the Financial Conduct Authority to avoid market chaos. That alone tells you how big this is.

So what did the Court actually decide? Two crucial things that the press has widely misreported as “fully shutting the door” on claims:

First, they rejected the idea that car dealers owe consumers a “fiduciary duty” – basically saying car dealers don’t have to act like your financial adviser. The Court found that dealers are businesses selling cars for profit, not independent advisers working in your best interests.

Second, they threw out the “bribery” argument. The Court of Appeal had said commission payments were like bribes, but the UK Supreme Court disagreed. They said you can’t have bribery without that fiduciary duty in the first place.

But here’s what matters: they still found Mr Johnson’s car finance agreement was unfair and ordered the FirstRand Bank (Motonovo) o pay him back his commission plus interest. This claim was brought under Section 140 of the Consumer Credit Act 1974. The Supreme Court allowed appeals brought by finance companies but ultimately upheld Mr Johnson’s claim. On this front – it’s all systems go for very many consumers to claim compensation, in a win for consumers and claims firms who represent them.

The Five Factors That Could Win Your Car Finance Claim

The Supreme Court identified five key factors that determine whether your car loan was unfair due to commission (mis-selling):

1. The size of the commission – Mr Johnson’s was massive: 25% of what he borrowed and 55% of the total interest charges
2. Whether it was a discretionary commission arrangement (DCA) – where dealers could bump up your rate to earn more
3. Customer vulnerability – were you in a position to understand what was happening?
4. How the commission was disclosed – buried in small print doesn’t count
5. Whether proper rules were followed – did they comply with FCA regulations?

Mr Johnson won because his commission was so large it made the whole relationship unfair. And if Mr Johnson can successfully claim under these rules, so can you.

Billions Still on the Table – Whatever the Headlines Say

Don’t believe the doom and gloom headlines. Here’s what the experts are really saying about compensation after the Supreme Court ruling:

Despite the Supreme Court narrowing the scope of claims, the numbers remain staggering. Martin Lewis predicted post-ruling that compensation will still run between £5 billion and £15 billion, primarily from discretionary commission arrangements.

Banks had already provisioned billions before the ruling:

• Lloyds Banking Group: £1.15 billion
• Close Brothers: £295 million
• Santander UK: £165 million
• Barclays: £95 million

Pre-ruling estimates suggested even higher exposure, with Bank of America analysts estimating £24-38 billion and RBC Capital Markets projecting £11 billion total impact. The fact banks haven’t released these provisions after the Supreme Court ruling tells you everything.

Your Car Finance Claim: Two Bites at the Cherry

Here’s the really important bit that’s being buried in the coverage: this Supreme Court decision only deals with one type of claim. There’s a whole other avenue still wide open.

First: The Unfairness Test

Following Mr Johnson’s successful claim, if your car finance had any of these red flags, you could still claim:

• Very high commission (anything over 10-15% of what you borrowed should ring alarm bells)
• Commission that wasn’t clearly explained to you
• Being told you were getting the “best deal” when the dealer was actually bumping up your rate

Second: The FCA’s DCA Investigation (Still Coming!)

This is the big one. The Supreme Court decision doesn’t touch the FCA’s separate investigation into discretionary commission arrangements. The FCA has extended the pause to the deadline for motor finance firms to provide a final response to customer complaints regarding discretionary commission arrangements (DCA) until 4 December 2025.

Between 2007 and 2021, dealers could increase your interest rate to boost their commission. The FCA has already said this was wrong and is working on a compensation scheme. This adds a whole new category – “overly expensive commission” – on top of what the Supreme Court decided.

What the Court Really Said (Not What’s Being Reported)

The Supreme Court ruling has been widely misreported as “fully shutting the door” on compensation. That’s simply not true. What the Court actually said was that dealers don’t automatically owe you compensation just because they got commission.

But – and it’s a big but – they absolutely can owe you compensation if the relationship was unfair. Reed said that non-disclosure or a partial disclosure by dealers of the existence of a commission did not necessarily make the relationship between a customer and a lender unfair. The key word there? “Necessarily”. It means it still can be unfair – you just need to show why using those five factors.

The Court was crystal clear: each case turns on its own facts. If your commission was excessive, hidden, or you were vulnerable, you could still have a valid claim.

The Numbers Don’t Lie: It’s Not the End, It’s Actually the End of the Beginning

The truth is, this Supreme Court decision isn’t the end of car finance claims – it’s the “end of the beginning”. With the FCA’s DCA announcement still to come, and clear grounds for unfairness claims established, we’re still looking at one of the biggest consumer compensation exercises in UK history, one that merits the attention of the whole population.

The FCA has committed to making an urgent announcement before markets open on Monday 4 August 2025. The FCA confirmed it will “confirm whether we will consult on a redress scheme before markets open on Monday.” The FCA is sat on substantial evidence of wrongdoing in the car finance market – they are on record as having said so. Martin Lewis confirmed that “billions are still likely to be paid out” despite the Supreme Court narrowing the scope.

What Should You Do About Your Car Finance Claim?

Right now, you’ve got options. The Supreme Court has made it clear that unfair relationships can still lead to compensation, just like Mr Johnson’s case. But proving unfairness isn’t always straightforward.

You can absolutely pursue a car finance claim yourself – it’s free to complain directly to your lender, and if they say no, you can take it to the Financial Ombudsman Service without paying a penny. Some people prefer to wait for the FCA’s announcement on DCAs, which could make claiming simpler.

But here’s the thing: with potentially billions in compensation at stake, lenders won’t make this easy. A sceptic could even suggest there are active attempts by elements of the media to downplay the size of compensation that is actually due.

Don’t let misleading headlines put you off. This Supreme Court decision hasn’t ended car finance claims – it’s given consumer representatives a roadmap for winning them. Whether you want to claim now or wait for the FCA announcement, don’t be put off investigating your potential entitlement. The vast majority of consumers should still scrutinise their car loan carefully following the decision of the UK’s highest court on Friday.

Why Choose Allegiant?

Allegiant specialises in car finance claims following this Supreme Court decision. We know exactly how to present your case using the five factors the Court identified. We handle all communications with lenders and ensure your claim is properly presented to maximise your chances of success.

With the FCA’s announcement on discretionary commission arrangements expected soon, some consumers may wish to wait before proceeding with their car finance claims. However, given the potential complexity of proving unfairness under the Supreme Court’s criteria, seeking professional guidance can be invaluable. Allegiant offers a no-win, no-fee service, meaning you only pay if your claim is successful.

Contact Allegiant today for a free assessment of your potential claim, or if you prefer to wait for the FCA’s upcoming announcement, register your interest and we’ll keep you informed of developments that could affect your car finance claim.