Millions of UK drivers will miss out on compensation after the Supreme Court sided with car finance companies, sparing them a potential £44bn bill over hidden commission payments.

The court upheld only one borrower’s case, Marcus Johnson, while rejecting two others who alleged that dealer commissions were bribes or breaches of loyalty.

The ruling limits the scope of consumer claims but leaves the door open for a smaller compensation scheme, which the Financial Conduct Authority (FCA) is considering. The FCA plans to announce its decision before markets open on Monday.

MoneySavingExpert’s Martin Lewis advised consumers to wait for the FCA’s decision and warned against claims firms that charge up to 30% of any payout. He estimated potential compensation could range between £5bn-£15bn, benefiting a few million drivers with payouts in the hundreds of pounds.

The case was initiated by Close Brothers and FirstRand, challenging an appeals court decision that deemed most commission payments unlawful unless fully disclosed. Lenders feared that upholding that ruling would have led to mass claims from car finance customers, potentially destabilising the industry.

The government, regulators, and lenders had expressed concerns that a vast compensation bill could reduce loan availability and raise interest rates. The Treasury said it respects the ruling and will work with regulators to assess its impact, while lenders are preparing for a limited redress scheme under the FCA.

The Supreme Court found Johnson’s case valid due to a lack of transparency over a 55% commission on his loan, noting he was not likely to understand the complex terms. The other claims were dismissed. Photo by Ryan Stubbs (Haljackey), Wikimedia commons.