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Millions of UK drivers could receive car finance compensation from 2026 – but the payout is now much smaller than expected following a major Supreme Court ruling on Friday, August 1.
This ruling overturned an earlier Court of Appeal decision. It found that, while lenders sometimes failed to disclose payments made to car dealers, it didn’t mean that customers were harmed. As a result, the feared £44 billion (€51.5 billion) compensation bill has been slashed to between £9–18 billion (€10.5–21 billion), according to the Financial Conduct Authority (FCA).
At the centre of the scandal are Discretionary Commission Agreements (DCAs) – now-banned deals that allowed dealers to hike up interest rates in return for bigger commissions. These contracts were used extensively between 2007 and 2020, but they weren’t always disclosed to buyers.
The FCA announced that it would launch a six week formal consultation with banks in October. The compensation scheme will begin paying out payments in early 2026 if approved.
You should contact your lender and not the car dealership if you feel you may be affected. Many lenders have online forms that allow you to check if your contract contained a DCA.
As reported by, UK lender stocks surged after the ruling. Close Brothers rose 23.5 percent and Lloyds hit a decade-high. The Guardian.
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