Analysts predict consolidation as lenders face reduced liabilities while consumers press ahead with car finance claims.

The UK motor finance sector is set for a period of huge change following the recent Supreme Court judgement on car finance mis-selling [1]. The billions of potential liabilities and millions of customers entitled to make a claim have rocked the confidence of lenders and is also driving M&A speculation in the industry [2].

According to analysts, lenders such as Blue Motor Finance and Startline could soon come to market as investors weigh opportunities created by reduced uncertainty. With expected compensation liabilities now estimated at £9–18 billion [3], the scale is still vast but markedly less than the earlier £44 billion worst-case scenario.

A Sector Under Pressure

The Supreme Court recently ruled that around 14 million people were mis-sold car finance between 2007 and 2021. At the heart of the issue are discretionary commission arrangements (DCAs), where brokers and dealers were incentivised to raise customer interest rates for personal gain, without consumer knowledge.

The verdict leaves lenders with an unenviable task. Only 23% of people trust lenders to handle payouts fairly [4], while many companies are already warning that some customer records have been lost or deleted. This creates significant hurdles for the car finance claims process, particularly since 57% of potential claimants have moved house since taking out their finance agreement and over 8 million have misplaced their paperwork.

Facets of the scandal have been described as “potentially one of the biggest financial mis-selling scandals since PPI.” Comparisons have already been drawn with the historic PPI compensation scheme, and more questions are being asked about lender accountability.

Market Remains Resilient

Even with the possibility of redress costs coming in the future, the motor finance market in the UK has been demonstrating resilience. Data analysts also point out that by mid-2025, motor finance was still approximately £86 billion worth of consumer contracts and the financing of 80% of all new cars sales [5].

The strength of the market creates expectations that the industry will undergo significant restructuring in the future and that M&A deals will pick up pace. With less uncertainty over how large the compensation numbers are, valuations should also become clearer, with bigger players potentially pursuing consolidation of smaller ones to shore up their market position.

For consumers, however, the key focus remains on redress. Whether through the forthcoming FCA-led scheme or independent claims support, individuals affected by PCP claims and other finance agreements are being urged to stay informed.

The Human Impact of the Car Finance Scandal

It's not a question of legalese or balance sheets for the families who have been caught up in the car finance scandal. It is years of hidden extras, exorbitant interest and opacity. Thousands of pounds overpaid, often unknowingly.

The Supreme Court decision has reduced the number of people who could claim, but consumer groups say millions are still entitled to make a claim. The difficulty is to treat those people fairly when they claim, at a time when borrowers feel particularly let down by lenders.

Some finance claims experts argue that waiting for lenders to act may leave consumers at a disadvantage. With records missing and addresses outdated, it is unclear how effectively lenders can trace all affected customers without outside intervention.

Why Claims Firms Still Matter

Some financial commentators have suggested that consumers should “sit on their hands” and wait for the FCA’s redress scheme to roll out. But for those who have lost paperwork, changed addresses, or simply distrust the very lenders who profited from the mis-selling, this may not be the most practical approach.

That’s why independent support remains an option. For example, Reclaim247 highlights that many affected customers can begin their car finance claims without providing paperwork or car registration details. All that’s needed is a name, address, and date of birth.

The service is FCA-authorised, with solicitors handling claims on a no win, no fee basis. With billions of dollars involved, and with low confidence in lenders, many consumers find it worthwhile to have an independent party in their corner.

Keeping Up With the Latest Developments

The industry fallout is far from over. As the FCA prepares its compensation scheme, updates will continue to shape the road ahead. Readers looking for the latest updates on car finance claims in the UK should watch for announcements in October, when FCA is expected to consult [6] and is expected to set out clearer timelines for payouts, which are likely to be £950 per claim [7].

In the meantime, if you fall into this category, it's time to take stock of where you stand. If you're not sure who your lender was, have lost paperwork, or just want to know for certain whether or not you're eligible, professional advice can offer peace of mind.

What It Means for Consumers

The Supreme Court ruling may have reduced lender liabilities, but the consumer impact remains enormous. With PCP claims still forming a significant portion of cases and the car finance scandal affecting millions, the scale of potential redress is unprecedented.

The good news is that options exist. Whether through the forthcoming FCA-led process or by engaging a finance claims expert, consumers are not without recourse. What matters now is awareness, timing, and ensuring that claims are lodged through trusted and authorised channels.

Conclusion

The car finance scandal has made the headlines again this month. A Supreme Court ruling on the issue was the main talking point for lenders and consumers alike. For the industry, it has seen the beginning of a shake-up with rumours of M&A activity as the industry looks to recalibrate in a new finance landscape. For consumers, it has highlighted the importance of transparency and taking action if they think they were mis-sold.

As the story develops, one thing is clear: car finance claims will remain at the centre of both financial and consumer debates for years to come. Whether through regulatory schemes or independent support, millions of UK drivers now have the opportunity to seek justice for years of hidden costs.

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1. Supreme Court judgement on car finance mis-selling - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
2. M&A speculation in the industry - https://www.reuters.com/sustainability/boards-policy-regulation/uk-motor-finance-ruling-could-fuel-ma-2025-08-18/
3. compensation liabilities now estimated at £9–18 billion - https://www.reuters.com/business/finance/uks-fca-proposes-9-billion-18-billion-pound-redress-scheme-motor-finance-claims-2025-08-03/
4. only 23% of people trust lenders to handle payouts fairly - https://www.slatergordon.co.uk/newsroom/consumers-trust-the-financial-conduct-authority-to-resolve-the-car-finance/
5. by mid-2025, motor finance was still approximately £86 billion worth of consumer contracts and the financing of 80% of all new cars sales - https://www.reuters.com/sustainability/boards-policy-regulation/uk-motor-finance-ruling-could-fuel-ma-2025-08-18/
6. October, when FCA is expected to consult - https://www.fca.org.uk/news/press-releases/fca-consult-motor-finance-compensation-scheme
7. payouts, which are likely to be £950 per claim - https://www.theguardian.com/business/2025/aug/04/who-will-get-car-loan-payout-how-much-regulator