Millions of UK drivers will not receive compensation after the Supreme Court ruled against claims of mis-sold car finance, in a landmark judgment that shields major banks from potentially £44 billion in redress costs.
In a decision handed down on Friday, the UK’s highest court overturned previous rulings that found car dealers should have disclosed commission payments received from lenders when arranging finance agreements. The judges rejected arguments that such payments constituted “bribes” or that dealers held a fiduciary duty to act in the best interests of their customers.
However, the ruling wasn’t a total victory for the banking sector. The court acknowledged that failing to disclose certain commission arrangements could be considered “unfair” under specific conditions, though it emphasized this point related to the individual case in question rather than the wider industry.
Martin Lewis, founder of MoneySavingExpert, noted that the judgment appeared narrow in scope:
“It seems the ruling is based on one customer’s circumstances, not a blanket precedent for all car finance agreements.”
The decision is seen as a significant reprieve for Chancellor Rachel Reeves, who was concerned that a widespread compensation scheme—similar to the £50bn PPI scandal—could have posed a serious risk to the UK’s economic stability.
The ruling protects major lenders, including Lloyds Banking Group, Barclays, and Santander, from a deluge of claims linked to historic motor finance agreements. Analysts had warned the industry faced redress costs of up to £44 billion if the court had upheld the earlier decisions.
