Drivers could be in for a windfall to the tune of thousands of pounds, due to a car finance mis-selling scandal reminiscent of the infamous Payment Protection Insurance (PPI) fiasco.
Many motorists have been losing out on their hard-earned cash for years, all thanks to a car finance mis-selling scandal that's recently come under the spotlight. It boils down to concealed "secret" commissions that lenders paid car dealers. It is claimed that the payments caused some consumers to sign up for finance agreements carrying higher-than-necessary interest rates without their knowledge.
The scale of this financial debacle has only just emerged, with a pivotal judgement from the UK Supreme Court expected later in 2025. This decision will clarify how much money car finance companies must repay their customers.
Those who've snapped up cars, vans, or motorbikes through Personal Contract Purchase (PCP) or Hire Purchase (HP) before 28 January 2021 might be in line to get back £1,000s. My Claim Group (MCG) are assisting those hit by the scandal (or those who suspect they might be) to get back what they're owed.
Visit the My Claim Group website to find out how much you could be owed
According to MCG, secret commissions might have crept into about 40% of HP and PCP deals inked between 2007 and 2021, meaning there's a fair chance you've overpaid and deserve some compensation. MCG's expertise has so far guided vehicle owners in lodging claims that could each average a cool £4,000.
Check out our helpful guide to navigating the car finance mis-selling mess:
What is the background to the scandal?
Before the regulatory overhaul in 2021, many car finance agreements relied on "discretionary commission arrangements." Under this scheme, car sellers had the power to determine interest rates for finance deals. The higher the rate, the fatter the commission check.
This arrangement led to an obvious conflict of interest, as dealerships were enticed to push higher-rate loans that may not have been the most economical choice for customers, often without making the commission framework clear to the consumers. As a result, unwitting customers frequently ended up with pricier loans, blind to the fact that their loan terms were shaped by the seller’s ambition to boost their own pay packet.
When was this practice put to a stop?
The Financial Conduct Authority (FCA) stamped out discretionary commissions in January 2021. But it didn't end there; probes unearthed that these questionable dealings date back to at least 2007, spurring a deep dive into historical lending behaviours.
A pivotal moment occurred in October 2024 when the Court of Appeal declared that the non-disclosure of commissions on car loans was illegal. This ruling broadened the scope for mis-selling claims, establishing a precedent that any hidden commission arrangements could now be a valid ground for consumer compensation.
This judgement triggered a wave of complaints, with the Financial Ombudsman Service recording an all-time high of 18,658 new car finance cases in the last quarter of 2024.
What's the current situation?
The scandal led to government intervention. In January 2025, UK Chancellor Rachel Reeves stepped in to intervene in the Supreme Court case to shield lenders from potential multibillion-pound payouts, voicing concerns about the wider economic implications and the possible impact on consumers' access to car loans.
At the same time, claims management companies like My Claim Group are actively urging consumers to lodge complaints. The Supreme Court is currently examining a crucial appeal by car loan providers, following earlier rulings that sided with consumers. The FCA has temporarily halted the complaints process until the court's verdict, expected later this year. The result of this appeal will play a significant role in determining lenders' liability.
What can you do?
If you suspect you may have been affected by the scandal, head over to the My Claim Group website for more information and start the straightforward process to find out if you're due a refund.
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