South Africa's FirstRand Ltd, which operates as MotoNovo in the UK, has reported a 10% increase in annual profits but took £154m in provision for rising car finance claims. [1] The move has underlined the impact the mis-selling scandal is having on lenders, as millions of consumers are set to apply for refunds following the Supreme Court's ruling on unfair agreements.

The Car Finance Claims Landscape

A historic court decision is prompting a fresh analysis of the UK car finance industry. This is due to the Supreme Court decision which found that 14 million people were mis-sold car finance between 2007 and 2021. The ruling that is bound to cause an enormous effect on the UK financial sector may leave lenders and millions of consumers who want to be compensated in the car finance scandal.

The Supreme Court Ruling: A Landmark Decision

The Supreme Court has ruled that many car finance deals were mis-sold [2]. The court found that many car finance products were mis-sold to customers because undisclosed commissions were being paid to dealers and this had not been made clear to customers. The ruling focused on an arrangement known as Discretionary Commission Arrangements (DCAs) which meant that customers were being charged higher interest rates without realising it. The ruling has paved the way for a potential redress scheme, estimated to cost between £9 billion and £18 billion [3].

FCA: up to 14 million car loans could be eligible for redress

FCA estimates that as many as 14 million car loans could be eligible for redress. [4] The scale of mis-selling of hidden commissions and extra interest rates is why some are referring to this as a car finance scandal. Individual payouts will differ, but reports suggest that the average car finance refund, on discretionary commission arrangements will be around £950 per agreement. [5] In some cases the claims process will result in individuals being entitled to much larger payouts.

The FCA has made clear that the scheme will not encompass every loan agreement written during the relevant period. Instead it will be targeted at instances in which the practice is demonstrable, such as discretionary commission schemes. It is hoped that this filtering will provide a good balance between equity for consumers and soundness for the credit industry.

The Consumer Perspective: Trust and Documentation Challenges

There are also problems from a consumer perspective. Research carried out by Find Out Now on behalf of consumer law firm Slater and Gordon found that only 23% of people trust the lenders to manage the payouts fairly [6]. Also, 57% of people who may have a claim have moved house since they took out their finance deal and over 8 million have lost their paperwork, making it hard for them to make claims themselves.

The Role of Claims Management Companies

Given the complexities involved, many consumers are turning to claims management companies for assistance. These firms also house finance claims experts. This simply means that their role is to assist consumers with car finance claims. These professionals understand how to get through the legal and administrative challenges associated with these processes. Reclaim247, for example, is a company that has created an easy process. Consumers can check their eligibility for compensation. These services are FCA-authorised, and they also have a no-win, no-fee structure.

Conclusion: Navigating the Path to Compensation

The car finance mis-selling scandal has caused great distress to consumers and understandably damaged trust with lenders. But the recent Supreme Court ruling, as well as the moves by regulators such as the Financial Conduct Authority (FCA), should mean that consumers have a right to hope they will be able to claim back the compensation they deserve. With the best guidance from a trusted claims management company, the process should be far from a pain.

For more information on how to initiate a claim, visit Reclaim247.

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References:

1. South Africa's FirstRand Ltd, which operates as MotoNovo in the UK, has reported a 10% increase in annual profits but took £154m in provision for rising car finance claims - https://www.reuters.com/world/africa/firstrands-annual-earnings-rise-10-after-further-uk-provision-2025-09-11/
2. The Supreme Court ruled that a large number of car finance deals were mis-sold - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
3. The ruling has paved the way for a potential redress scheme, estimated to cost between £9 billion and £18 billion - https://www.fca.org.uk/news/press-releases/fca-consult-motor-finance-compensation-scheme
4. FCA estimates 14 million car loans may be eligible for redress - https://www.ft.com/content/ed45913c-4e45-4e76-aa0b-010ba707b4c4
5. the average car finance refund on discretionary commission arrangements will be around £950 per agreement - https://www.birminghammail.co.uk/motoring/motoring-news/14-million-drivers-could-receive-32193839
6. only 23% of people trust the lenders to manage the payouts fairly - https://www.slatergordon.co.uk/newsroom/consumers-trust-the-financial-conduct-authority-to-resolve-the-car-finance/