At The Debt Advice Service, we want to keep you up to date with the latest information that could affect your finances. Recently, the Financial Conduct Authority (FCA) has shared some important news about car finance claims. Here’s what you need to know. 

What’s the Issue with Car Finance? 

From 2007 to 2021, many car dealerships and brokers used something called Discretionary Commission Arrangements (DCAs). This meant they could set their own interest rates for car loans. Sadly, this led to many customers paying more than they should have, as the extra commission wasn’t clearly explained. The FCA has been investigating this practice to see if it was fair to consumers. 

What’s Happening Now? 

The Supreme Court is set to make a big decision in April 2025 about whether these commissions were unlawful. This decision will help decide how consumers might be compensated. The outcome could affect a lot of people, so it’s important to stay informed. 

What the FCA Plans to Do 

If the Supreme Court rules in favour of compensation, the FCA plans to set up an easier way for people to get money back. Instead of filing individual claims, the FCA wants car finance companies to identify affected customers and pay them back directly. This would make the process simpler and quicker for everyone. 

Key Points to Remember 

  • Who is Affected? If you got a car finance agreement between 2007 and 2021, you might be entitled to compensation, especially if the commission wasn’t clearly explained. 
  • How Much Could You Get? Estimates suggest that payouts could average around £1,100 per person, with total industry liabilities potentially reaching up to £44 billion, according to reports from The Guardian and industry sources. 
  • What Happens Next? After the Supreme Court makes its decision in April 2025, the FCA will explain how the compensation process will work, probably within six weeks. 

What You Can Do 

  • Stay Up to Date: Make sure to follow updates from the FCA and other trusted news sources. 
  • Check Your Agreement: If you think you might have been charged unfairly, it’s a good idea to review your car finance agreement. You may be able to claim compensation. 

At The Debt Advice Service, we’re here to help you understand these changes and what they mean for you.   We expect further information on this topic to be available in April 2025.