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OPINION
RETAIL
Supreme Court
sanity at last
→ David Wylie is commercial director at LendingMetrics
T
here are many who breathed a
massive sigh of relief in August.
Another decade of claimschasing – this time in car
finance – looks like it has been
averted at the last minute.
The Supreme Court
overturned an earlier Court of
Appeal ruling that was set to result in a
stampede of finance mis-selling activity
on the part of claims management
companies.
The pivotal case in question involved
three motorists – Marcus Johnson,
Andrew Wrench and Amy Hopcraft –
who claimed they were misled due
to undisclosed commissions paid to
car dealers acting as credit brokers
for finance agreements before 2021.
The Court of Appeal in October 2024
ruled that such ‘secret’ commissions
were unlawful without fully informed
consent, potentially entitling millions
to compensation.
But the Supreme Court found that car
dealers did not owe a fiduciary duty of
loyalty to customers, so commissions did
not constitute bribery or unlawful profit.
This landmark ruling drastically
limits the scope of claims based on
undisclosed commissions that could have
cost the banking sector between £30bn
and £44bn.
The Supreme Court effectively pulls
the plug on any claims that are based
on undisclosed commissions – nonDiscretionary Commission Arrangements
(DCA) – because dealers are not required
to act solely in customers’ interests.
This was a major blow to the claimschasers, given that this eliminates a
broad category of claims affecting up
to 99% of pre-2021 car finance deals. As
anyone with a YouTube account knows,
Claims Management Companies heavily
invested in advertising non-DCA claims,
expecting a flood of payouts after the
earlier Court of Appeal’s ruling.
However, before we all break out the
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AUTOMOTIVE BUSINESS Q4 2025
bunting, there are elements of the finding
that will undoubtedly allow some claims
chasing activity, albeit on a much smaller
scale than
was originally feared.
Automatic consequences
Legal experts say that individual claims
under the Consumer Credit Act may
still be pursued if commissions were
excessively high or disclosure was
inadequate, but these require caseby-case evidence, making mass claims
unviable. Also, it should be borne in mind
that the Supreme Court ruling does not
directly affect DCA claims where finance
intermediaries could increase interest
rates to earn higher commissions –
banned by the FCA in 2021.
The Financial Conduct Authority (FCA)
is actively reviewing DCA mis-selling and
announced on 3rd August 2025 that it is
going to consult on a redress scheme,
with potential payouts of £9bn to £18bn
starting in 2026.
It is said that this scheme may be
automatic, requiring no consumer
action, and hence no CMC input. And
consumer activists such as Martin Lewis
are advising consumers to wait for the
scheme to be announced, given that the
use of a CMC would serve little purpose
and result in the loss of up to one third of
any payout.
The suggestion that this scheme may
be ‘automatic’ is interesting. Could it
be that what the finance industry has
been saying for a long time has at last
been fully considered by the powers that
be? That the weaponisation of claims
by CMCs via automation and legal
chicanery, is not a win-win for the public.
Consumers have to pay for the largesse
of payouts in the form of higher finance
costs going forward. Whichever way
you look at it, CMC activity is a drain on
the vitality and competitiveness of the
financial services sector. A net cost to
consumers, not a benefit. i
