Car finance Supreme Court Ruling

[otherclive]

This afternoon the Supreme Court will give its ruling on the car finance discretionary commission case.

At present the media are understandably focused on car finance, but could it be relevant to other loans arranged by the seller of the items. IE caravans, motorhome, double glazing, furniture, kitchens etc. If so the sums involved for possible compensation are absolutely mind boggling.

I remember years ago getting compensation for our endowment mortgage and credit card protection. One because it didn’t make as much money as original estimated, the other because my credit cards already gave some protection. Wrt the mortgage I always knew its final closing value could vary. With the CCP via the bank it did actually provide more benefits than covered solely by the credit card. In both cases I had no intention to make any claim, but the providers contacted me and they had done all the leg work. So I thought nothing lost etc……

 

[Buckman]

We have already sent in a request on our caravan finance in addition to cars.

 

[otherclive]

We have already sent in a request on our caravan finance in addition to cars.

The only loans we’ve had in many many years were for new windows and doors when we moved in to this house 6 years ago. They were via the selling company but interest free. Do you think I can claim that the price discount should have been larger?

I do remember the days of yore when I’d taken time out of work, put on my best bib and tucker to attend my appointment with the bank manager. He would offer me a seat when I had risen from my knees. For one car purchase he refused the loan request even though I could afford the repayments 😂

 

[RogerL]

If the Supreme Court upholds the Appeal Court ruling, the government will be forced to step in and block it - otherwise it would destroy the UK finance industry, so hopefully the Supreme Court will overturn it. The earlier discretionary interest issues will continue to be processed.

I wouldn't benefit - my Touareg was bought on PCP to get the large deposit contribution but then paid off immediately - it was VW's own finance arm so no discretionary interest rate.

 

[otherclive]

If the Supreme Court upholds the Appeal Court ruling, the government will be forced to step in and block it - otherwise it would destroy the UK finance industry, so hopefully the Supreme Court will overturn it. The earlier discretionary interest issues will continue to be processed.

I wouldn't benefit - my Touareg was bought on PCP to get the large deposit contribution but then paid off immediately - it was VW's own finance arm so no discretionary interest rate.

Would that be called “Doing a DJT” for the Executive to overrule or ignore the Judiciary? Now introducing new legislation could be an option.

 

[otherclive]

The Supreme Court President’s ruling was delivered as a model of clarity. Lord Reed even made the point that Treasury intervention was rejected as the Court is only concerned with the Law. There will be Claims company bosses going home tonight in a sour mood no doubt.

 

[Buckman]

No skin off my nose as the way I look on it is that it happened prior to 2021 and that money is gone either way. It would have been a nice little bonus though to help with Christmas shopping.

 

[RogerL]

Would that be called “Doing a DJT” for the Executive to overrule or ignore the Judiciary? Now introducing new legislation could be an option.

I guess it would have been new legislation. rather than trying to overrule the Supreme court.

 

[otherclive]

I guess it would have been new legislation. rather than trying to overrule the Supreme court.

Over ruling our Supreme Court would be a step I wouldn’t like to ever see. First step to a downward slide. Still not to worry the Supreme Court have come up ******, or not as the case may be.

 

[Mr Plodd]

I never, ever, bought anything on finance, always a personal loan as the rate was always better and the repayments less.
This saga does annoy me a little. People happily signed the finance agreement, if they didn't take due diligence over the terms and conditions then hard luck is my view.
But of course these days everything that goes wrong, or people dont like, is somebody else's fault isnt it?

 

[Buckman]

I never, ever, bought anything on finance, always a personal loan as the rate was always better and the repayments less.
This saga does annoy me a little. People happily signed the finance agreement, if they didn't take due diligence over the terms and conditions then hard luck is my view.
But of course these days everything that goes wrong, or people dont like, is somebody else's fault isnt it?

Not sure why it should annoy you if the fact is that the sales person, unknown to you, was getting a bigger commission if they were able to get you on a higher interest rate when a lower rate was available? Many people were grateful that they got the HP loan and "trusted" the sales person to do the right thing.

Not every one was fortunate enough to have the cash available to buy a unit out right. In addition, a bank loan does not offer the same protection as buying on hire purchase. A way around this is to buy on HP and then get a loan at a lower rate to pay off the HP.

 

[otherclive]

I never, ever, bought anything on finance, always a personal loan as the rate was always better and the repayments less.
This saga does annoy me a little. People happily signed the finance agreement, if they didn't take due diligence over the terms and conditions then hard luck is my view.
But of course these days everything that goes wrong, or people dont like, is somebody else's fault isnt it?

I think the Supreme Court judgement aligns with your view in its overturning of two elements of the Appeal Court ruling. Seeing a lady in tv claiming the car salesman took advantage of her vulnerability didn’t wash. And any thoughts of duty of care or bribery were not supported. Although I guess further changes to FCA regulations will come on top of those introduced in 2021.

 

[woodsieboy]

I agree with Mr Plodd
If I sign up for something and then find out I could have got a better deal, that's my tough luck, if the situation was reversed and the finance companies undercharged these people on the commissions, would they agree to pay more to the finance company?
I take the view that the lawyers are no better than scammers, encouraging people to sign up for their no win no fee rip off.

 

[RogerL]

I never, ever, bought anything on finance, always a personal loan as the rate was always better and the repayments less.
This saga does annoy me a little. People happily signed the finance agreement, if they didn't take due diligence over the terms and conditions then hard luck is my view.
But of course these days everything that goes wrong, or people dont like, is somebody else's fault isnt it?

Surely personal loans are just part of "finance" ?

Most people didn't realise they could haggle when discretionary interest was involved, usually because the lender/retailer hid the fact that it was discretionary.

 

[Jcloughie]

I agree with Mr Plodd
If I sign up for something and then find out I could have got a better deal, that's my tough luck, if the situation was reversed and the finance companies undercharged these people on the commissions, would they agree to pay more to the finance company?
I take the view that the lawyers are no better than scammers, encouraging people to sign up for their no win no fee rip off.

I fully agree too.

If I was making a large purchase I would shop around for the best method to finance it. Not just take a dealers word for it.

Finance is a strange world which I admit I am very poor at understanding. When I bought my MG in 2023, I intended to pay outright. The salesman said he could give me £1000 off if I bought on one of two choices of finance through Santander. At first I refused. But he said if I paid it off in full within 3 weeks there would be no penalty and I would still have the £1000 off. So a no brainer.

Also, I imagine the salesman got a commission as well.



John

 

[Hutch]

I fully agree too.

If I was making a large purchase I would shop around for the best method to finance it. Not just take a dealers word for it.

Finance is a strange world which I admit I am very poor at understanding. When I bought my MG in 2023, I intended to pay outright. The salesman said he could give me £1000 off if I bought on one of two choices of finance through Santander. At first I refused. But he said if I paid it off in full within 3 weeks there would be no penalty and I would still have the £1000 off. So a no brainer.

Also, I imagine the salesman got a commission as well.



John

I done exactly the same with a car and one of my caravans.

 

[Beardy]

This saga does annoy me a little. People happily signed the finance agreement, if they didn't take due diligence over the terms and conditions then hard luck is my view.
But of course these days everything that goes wrong, or people dont like, is somebody else's fault isnt it?

I totally agree with you. If someone agrees a finance deal, they should know how much they will pay per month and for how many months when they sign on the dotted line. How can they argue that it was unfair because the salesman could have given them a better deal or didn't disclose how much commission they were making from the deal? If they are so incompetent that they are unable to shop round for the best deal that's their problem. A fool and their money are easily parted.

I think the Supreme Court should have thrown out all three cases, the knock on effects from the case they upheld could be far reaching.

 

[Buckman]

I totally agree with you. If someone agrees a finance deal, they should know how much they will pay per month and for how many months when they sign on the dotted line. How can they argue that it was unfair because the salesman could have given them a better deal or didn't disclose how much commission they were making from the deal? If they are so incompetent that they are unable to shop round for the best deal that's their problem. A fool and their money are easily parted.

I think the Supreme Court should have thrown out all three cases, the knock on effects from the case they upheld could be far reaching.

That is a bit harsh. Many people would object to be called a fool because they were not aware that they could get a better rate elsewhere and that probably includes some posters on this forum. People are aware of how much they will pay a month and for how many months.

The issue is not about interest, but the interest rate that was secretly upped so the sale person got a better commission and the finance company increased their profits. The higher the interest rate, the more commission was paid. Hire purchase was probably easier to obtain for many people than getting a loan from a bank.

The finance company always owns the unit until it is paid off whereas with a bank, once the loan has been transferred to the consumer the bank has no collateral hence HP was an easier "loan" for many people including ourselves. Not everyone earned such good money that they were able to borrow from a bank.

Lastly although we were able to purchase outright most of the HP stuff over the past 10 years, we still preferred to use HP due to the security it offer if things went wrong and on three different occasions in the past ten or more years it has paid off saving us in excess of £20,000!

Also something to note is that the UK's highest court has partially overturned a landmark Court of Appeal case on hidden car finance commission claims and the industry regulator now says it will confirm within days whether to consult on a redress scheme. See https://www.moneysavingexpert.com/news/2025/08/car-finance-supreme-court-martin-lewis/

 

[otherclive]

That is a bit harsh. Many people would object to be called a fool because they were not aware that they could get a better rate elsewhere and that probably includes some posters on this forum. People are aware of how much they will pay a month and for how many months.

The issue is not about interest, but the interest rate that was secretly upped so the sale person got a better commission and the finance company increased their profits. The higher the interest rate, the more commission was paid. Hire purchase was probably easier to obtain for many people than getting a loan from a bank.

The finance company always owns the unit until it is paid off whereas with a bank, once the loan has been transferred to the consumer the bank has no collateral hence HP was an easier "loan" for many people including ourselves. Not everyone earned such good money that they were able to borrow from a bank.

Lastly although we were able to purchase outright most of the HP stuff over the past 10 years, we still preferred to use HP due to the security it offer if things went wrong and on three different occasions in the past ten or more years it has paid off saving us in excess of £20,000!

Also something to note is that the UK's highest court has partially overturned a landmark Court of Appeal case on hidden car finance commission claims and the industry regulator now says it will confirm within days whether to consult on a redress scheme. See https://www.moneysavingexpert.com/news/2025/08/car-finance-supreme-court-martin-lewis/

The court found in the case of Mr Johnson that the hidden commission paid to the dealership was unreasonable so upheld his case. So like you I think the court has given a balanced judgement.

 

[woodsieboy]

It's frightening, there are people out there siging up to, in some cases, very significant financial commitments,and when contacted by a random company they have never dealt with brfore
sign up to try and recover money that they did not realise they had agreed to pay.
Whatevevr happened to personal responsibility?
Equally there are people out there who understand how finance works, and use the system to their benefit, the protections offered by certain financial products can be substantial as Buckman has indicated
Surely we all know that when purchasing something there is always the possibility that it could be less expensive somewhere else,but that's just life.

 

[Buckman]

It's frightening, there are people out there siging up to, in some cases, very significant financial commitments,and when contacted by a random company they have never dealt with brfore
sign up to try and recover money that they did not realise they had agreed to pay.
Whatevevr happened to personal responsibility?
Equally there are people out there who understand how finance works, and use the system to their benefit, the protections offered by certain financial products can be substantial as Buckman has indicated
Surely we all know that when purchasing something there is always the possibility that it could be less expensive somewhere else,but that's just life.

I think many people misunderstand what the claim was about. The claim was with car finance companies and definitely not random companies. Most of the companies were reputable like Close Brothers, Lloyds etc. The issue was that the sales person acted in their OWN interest by offering a HP agreement at a higher interest rate than what was required when they could have offered the same agreement at a lower rate.

Sometimes the consumer is offered the loan at 14%, but when they start objecting the interest rate gets lowered as the customer argues to perhaps 10 or 12%. The consumer accepts this as they think that they have scored a good deal, but the salesperson could have gone as low as 8%! The sales person was acting on behalf of the finance house who are a third party at that point and not the buyer. That part was illegal hence the reason why compensation may still be paid to millions fo people.

 

[woodsieboy]

Hi Buckman
My reference to 'random companies' referred to the lawyers who claim to be able to recover the 'unfair'payments on behalf of gullible customers
Of course the many substantial finance house offer a use ful and well documented service.
I am uncomfortable with the use of the word unfair when applied to commissions, who can define what is unfair, for example if I sell a product to a customer for £100 and the product cost me £25 is that unfair?
Suppose the costs to me of running premises, wages etc takes £50 out of the profit leaving me £25 is that unfair?
The sales person has a resposibilty to his business, if he completes a deal, to which the customer agrees, I don't understand why the customer should be able to use a third party, with an incentive to make money for themselves, to in effect renegotiate the deal.
Also some of the 'victims' will have sold the car on which they had finance , by the time the claim is made,

 

[Buckman]

Hi Buckman
My reference to 'random companies' referred to the lawyers who claim to be able to recover the 'unfair'payments on behalf of gullible customers
Of course the many substantial finance house offer a use ful and well documented service.
I am uncomfortable with the use of the word unfair when applied to commissions, who can define what is unfair, for example if I sell a product to a customer for £100 and the product cost me £25 is that unfair?
Suppose the costs to me of running premises, wages etc takes £50 out of the profit leaving me £25 is that unfair?
The sales person has a resposibilty to his business, if he completes a deal, to which the customer agrees, I don't understand why the customer should be able to use a third party, with an incentive to make money for themselves, to in effect renegotiate the deal.
Also some of the 'victims' will have sold the car on which they had finance , by the time the claim is made,

I think your example is out of context as the issue revolved around the interest rate being charged when a lower interest rate could have been offered. The issue here is that the business probably did not profit from the increased interest rate, but the third party finance house and the sales person probably did profit. The sales person through the extra commission they were paid.

Many people were grateful to get the loan on HP so they could buy something they needed. The majority of the "victims" more than likely have sold the vehicle they bought at the higher interest rate, but that doesn't mean they cannot claim if justified.

 

[otherclive]

I think many people misunderstand what the claim was about. The claim was with car finance companies and definitely not random companies. Most of the companies were reputable like Close Brothers, Lloyds etc. The issue was that the sales person acted in their OWN interest by offering a HP agreement at a higher interest rate than what was required when they could have offered the same agreement at a lower rate.

Sometimes the consumer is offered the loan at 14%, but when they start objecting the interest rate gets lowered as the customer argues to perhaps 10 or 12%. The consumer accepts this as they think that they have scored a good deal, but the salesperson could have gone as low as 8%! The sales person was acting on behalf of the finance house who are a third party at that point and not the buyer. That part was illegal hence the reason why compensation may still be paid to millions fo people.

The Court didn’t agree that sales person was acting in the interest of the finance provider in two of the cases. It recognised that both sales person and finance house were businesses in their own right, and had a legitimate right achieve benefit for the business. In parallel the Buyer too has a responsibility to look, or ask for alternative buying options. This is where many buyers are vulnerable as they don’t understand car financing. Salesmen are employed because they are good at selling and many buyers are nit confident to haggle. But it’s no different buying double glazing, solar panels, kitchenscetc. That’s a fact of life. When I bought my first Sorento we were nearly home before the sales mam rang and said if I could sign before close of play we had a deal.

The case that was upheld was because the Court deemed the commission unreasonable/disproportionate to the sums involved. IE sharp practice, which is the beauty of Civil cases as they are not necessarily by law or case law.

It was also useful that the Court ruled that unlike a mortgage or investment advisor a car dealer offering a loan has no fiduciary responsibility to the buyer.

I suspect the FCA will seek to close loopholes but if car dealerships loose out on commission in some way, the loss will go onto the price of vehicles.

 

[Buckman]

I suspect the FCA will seek to close loopholes but if car dealerships loose out on commission in some way, the loss will go onto the price of vehicles.

They have since 2021 and the commission has to be declared. On the Jeep it was something like £120, but the interest rate was 6.1% in 2022 so fairly reasonable amount considering I managed to get a £3500 repair done at "their" cost. Jeep Uk actually paid, but the finance house put pressure on them otherwise finance house would have had to pay.