A HUGE update in the car finance mis-selling scandal has been issued.

The Financial Conduct Authority (FCA) has carried out a investigation whether motorists were unknowingly overcharged on historical loans.

1

Those who bought one carmotorcycle or van on finance before 28 January 2021, could owe potentially thousands of pounds.

The Swedish Competition Authority is in the process of finding out how many motorists were affected and what compensation the customers will receive.

Today, in an “unexpected” decision in one of the test cases of motor finance, a court has sided with drivers against the banks and lenders.

The Court of Appeal held that a broker could not legally receive a commission from the lender without obtaining the customer’s fully informed consent to the payment.

The ruling said that in order to obtain consent, the consumer must be told all material facts that might influence their decision, including the amount of the commission and how it would be calculated.

The judges judged that it did not happen in any of these cases.

Three cases were joined earlier this year, the Hopcraft case is against merchant banking group Close Brothers, Wrench is against South Africa’s Firstrand Bank and Johnson is against Firstrand Bank and Motonovo Finance.

The court revealed today that it has unanimously allowed all three appeals.

The ramifications of today’s ruling are expected to reverberate throughout the motor finance sector.

The FCA is believed to be monitoring developments closely as they continue their investigation into the scandal.

“This ruling is a huge win for consumer justice,” said Sam Ward, director at Sentinel Legal, a consumer rights law fixed.

“For too long, lenders have taken advantage of consumers through complex, unfair financial deals. This decision finally puts drive back into the hands of consumers, forcing banks to face the consequences of their actions.”

While Stephen Haddrill, director general of the FLA, which represents motor finance lenders, said: “This is a significant and unexpected judgment, the implications of which extend far beyond the motor finance sector, making it a matter that requires the immediate attention of the FCA.”

FCA had intended to publish the results of its investigation in September.

However, the publication date has been pushed back to May 2025 and the date companies must respond to customer complaints to 4 December 2025.

FCA says it has had to push back deadline due to it taking “longer than expected to get the information” it needed from the car finance companies involved.

The investigators have also not been able to complete theirs review due to a pending court case surrounding one of the complaints.

It is worth nothing, the FCA’s decision to extend deadline until December 4 next year is exactly when companies must respond to any complaints.

Customers can still complain to their suppliers before this time, and in some cases there are time limits for doing so.

You can find more information about any time limits on the FCA’s website.

What is the Auto Finance Commission Scandal?

The car finance commission scandal affects those who bought a car, motorbike or van on finance before 28 January 2021.

After that date, the City’s watchdog FCA banned lenders from using “discretionary commission arrangements” (DCAs).

DCAs allowed brokers to increase interest rates on car finance loans, which in turn saw their commissions increase.

It has been classed as an unfair practice because the drivers were not told about the DCAs and therefore believed that all deals were a fixed price that they could not negotiate.

Anyone who took out a vehicle on finance before 28 January 2021 could have unfairly paid more than they should have.

The Swedish Competition Authority has now started an investigation to see how many people have been affected.

On MSE’s website there is a useful checklist of who can queue for money back.

It also has a list of companies that are unlikely to have dished out questionable deals and are therefore not liable customers money.

How to claim

Consumer website MoneySavingExpert.com has a page on its website with a template email you can use to complain to your company.

Or you can complain directly to them without using the template.

In the complaint, you should ask if you were overcharged because your broker received a commission and ask the company to correct this if so.

If you are not satisfied with the company’s response, you can take your complaint to the Financial Ombudsman Service (FOS) for free.

You have until 29 July 2026, or up to 15 months from the date of their last response letter, whichever is longer.

Be careful about using a claims management company to help you recover any overpaid car finance as you will have to pay it part of a successful claim.

The FCA has previously said the total cost of compensating motorists affected by the car finance scandal could cost businesses between £6bn and £16bn.

This means that affected customers could get back a potential £1,000 in overpayments.

Got a money problem that needs sorting? Contact us by emailing [email protected].

Also, you can join ours Sun Money Chat and Tips Facebook group to share your tips and stories