The motor finance industry is under increasing scrutiny following a landmark Court of Appeal ruling in October, which deemed it unlawful for car dealers to receive commissions from lenders without the customer’s informed consent. This decision has significant implications for car finance agreements, including leasing deals, with an estimated 11.3 million additional customers potentially entitled to compensation. Here’s what you need to know.
However the motoring industry are being further investigated for mis-sold car leases, see the Times report: Car finance complaints process widened to include leasing deals
What the Court of Appeal Ruled on Secret Commissions for Car Loans and Leases
The Court of Appeal’s ruling addressed undisclosed car loan commissions, which occur when lenders pay commissions to car dealers without informing the customer. These arrangements, often linked to higher interest rates, have been criticised for unfairly benefiting dealers at the expense of consumers.
The ruling not only affects traditional car finance agreements but has now extended to motor leasing agreements, ensuring that all consumers using car finance products are treated equitably. According to the FCA, this expansion is critical to protecting consumer rights in the automotive sector.
Deadline for Complaints to make a Claim
In response to the ruling, the Financial Conduct Authority (FCA) has introduced measures to handle the anticipated surge in complaints. Lenders have been given until December 4, 2025, to address claims related to both discretionary and non-discretionary commission arrangements.
This timeline provides consumers with a clear window to pursue their claims for mis-sold car finance or leasing agreements. If you believe you were affected, now is the time to take action. Learn more about your rights on mis-sold car leases.
Potential Compensation and Industry Impact
The implications of this ruling are staggering. The credit rating agency Moody’s estimates that total redress costs could climb as high as £30 billion if the Supreme Court upholds the decision. This potential compensation bill mirrors the infamous Payment Protection Insurance (PPI) scandal, which cost companies approximately £50 billion.
Larger vs Smaller Banks and Lenders
While larger financial institutions like Lloyds, Barclays, and Santander UK may weather the storm, smaller lenders and specialised financing arms, such as those of Ford, Volkswagen, Aldermore, and Close Brothers, could face significant financial strain.
What This Means for Car Leasing Customers
Although the original Court of Appeal ruling did not specifically involve leasing agreements, the FCA has expanded its guidelines to include leasing complaints. This ensures that consumers using car leases—a common alternative to traditional financing—are not excluded from the compensation process.
The FCA has emphasised that consumers using similar products for similar purposes must receive equal treatment. For more details about whether your car lease was mis-sold, visit Hutcheon Law’s guide on mis-sold car loans.
How to File a Complaint Mis-Sold Car Leasing
If you suspect that you were mis-sold a car lease or finance deal, follow these steps:
- Review Your Agreement: Check if your dealer received a commission that was not disclosed to you.
- Gather Evidence: Compile all related documents, including contracts and communication with the dealer or lender.
- Submit Your Claim: Contact a legal expert to help you lodge your complaint effectively.
Hutcheon Law specialises in helping consumers recover compensation for mis-sold car leases and finance agreements. Learn how to start your claim on their Mis-Sold Car Finance Claims page.
A Growing Scandal
This latest car finance scandal echoes the scale of the PPI compensation claims, with millions of consumers potentially owed redress. The FCA’s deadline provides a clear timeframe for affected individuals to act, while the automotive finance industry braces itself for significant financial repercussions. If you believe you’ve been affected, don’t delay—ensure your rights are protected and your voice is heard. Visit Hutcheon Law today to learn more about how they can assist you. Further reading clink n the following links:
