Millions say they've been mis-sold car finance: How to tell if you're affected

Could you have been mis-sold car finance? ITV News Consumer Editor Chris Choi explains

The Supreme Court is hearing a landmark case on car loan commissions that could leave the industry facing a multi-billion pound bill.

Last year the Court of Appeal ruled that undisclosed commissions to car dealers who arranged loans were unlawful.

Officials found some car sellers got higher commissions when they signed buyers to higher interest rate deals, known as “discretionary commissions”.

Now the UK’s highest court will give a judgement affecting millions of car buyers, consumer compensation case since PPI.

Car buyer Desmond Gourde received compensation after he was charged too much interest.

Now, millions hope the Supreme Court will pave the way for billions of pounds in similar payouts.

“It dawned on me that it was crafty to put money in their pocket and take it all out of mine,” Desmond told ITV News.

“Looking back, I can see how wrong it was – if they were more upfront maybe people wouldn’t be claiming from them.”

In January 2021 the Financial Conduct Authority banned motor loan commissions that increased when customers paid more interest, and in October 2024, the court of appeals ruled that any undisclosed vehicle loan commissions were unlawful.

Lenders appealed to the Supreme Court, with the hearing starting on April 1. A final judgement is expected this summer followed by an official update on whether payouts will follow.

Consumer Editor Chris Choi explains why the car loans controversy is set to erupt

Lawyer Kavon Hussain, who represents 600,000 thousand car buyers, told ITV News what he thinks the case boils down to: “Is the consumer making an informed decision when they go into buy a car?”

“Do they know how much the car is, how much finance is and how much commission is being paid to the car dealer?” He asks.

Car loan firms say they applied rules that existed at the time, and that despite commissions most vehicle buyers still got good deals.

It’s estimated 31 million car loan agreements are affected with potential compensation up to £30 billion.

Adrian Dally, Director of Motor Finance at the FLA said: “Motor finance remains a popular product with customers, and it is therefore vital to ensure a continued and affordable supply.

“This relies on investors continuing to see the market as investable. The task now before the Supreme Court is to put this market back on a firm footing, underpinned by certainty and clarity.

Lenders and car buyers are in agreement about one thing: The supreme court must now provide clarity.