UK Supreme Court Expected to Rule on £44bn Car Finance Mis-Selling Scandal

The UK Supreme Court is set to deliver a landmark ruling on a £44 billion car finance mis-selling scandal involving undisclosed commissions paid by lenders to car dealers or brokers, which were deemed unlawful by a prior Court of Appeal decision. This ruling will determine if millions of drivers, who were unknowingly charged higher interest rates that funded these commissions, are eligible for compensation. The case centers on lenders such as FirstRand Bank and Close Brothers, with Lloyds Banking Group already setting aside over £1.2 billion in anticipation of claims. The Financial Conduct Authority banned discretionary commission arrangements (DCAs) in 2021, which allowed dealers to increase commissions by steering customers toward higher rates. If the Supreme Court upholds the appeal court's ruling, the FCA may implement a collective compensation scheme, potentially costing lenders billions and reshaping consumer rights in car finance. The decision has garnered attention from government officials concerned about the impact on credit availability and the broader economy.