Fri, 01 Aug 2025

Fri, 01 Aug 2025 Car loan scandal payouts row - what's it about?

The Supreme Court will make a key decision which could unlock compensation for millions of motorists.

* The UK's Supreme Court has ruled in favor of finance companies, denying millions of motorists a path to claim compensation for hidden commissions paid on car loans.
* Two out of three test cases were lost by consumers, with the court siding with finance companies.
* The decision reverses earlier rulings that had opened up the possibility of industry-wide claims for compensation from motorists.
* Some customers may still be eligible for payouts, but questions remain about who and how many will receive compensation.
* Lenders have set aside over £2bn for potential payouts, including £1.15bn by Lloyds Bank and £295m by Santander.
* The Financial Conduct Authority (FCA) is considering a redress scheme to compensate consumers who lost out due to discretionary commission arrangements (DCAs).
* Any compensation will depend on individual circumstances, with drivers potentially receiving the difference between their inflated interest rate and the rate they should have been charged.
* An 8% interest rate will be added to the loss, which could significantly increase the payout.
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