# What is the car finance commission scandal?

> Quick answer · Last updated 29 May 2026

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## In short

It refers to hidden commissions on car finance. Before January 2021, dealers could raise a customer's interest rate to earn more commission without telling them. A 2025 Supreme Court ruling and an FCA review have opened the door to compensation for affected drivers.

Most car finance (PCP and HP) is arranged by the dealer acting as a credit broker. Under discretionary commission arrangements, the lender let the dealer choose the interest rate, and the dealer earned a bigger commission on higher rates — a clear conflict of interest that was usually not disclosed. The FCA banned DCAs in January 2021.

The issue escalated when courts examined whether customers were told enough about commission. A Supreme Court judgment in 2025 clarified the legal position on disclosure, after which the FCA confirmed plans for a structured redress scheme covering eligible historic agreements.

For drivers, the practical takeaways are: agreements before 28 January 2021 are most likely in scope; you can complain to your lender for free; and you should rely on the FCA's official scheme rather than paying a claims firm. The position is still developing, so check gov.uk/complain-financial-service.

## Related

- [Can I claim car finance compensation?](https://moneyguide.org.uk/answers/can-i-claim-car-finance-compensation/)
- [PCP vs HP vs leasing](https://moneyguide.org.uk/compare/pcp-vs-hp-vs-leasing/)

## Primary source

gov.uk/complain-financial-service

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Independent UK money guidance from [Money Guide](https://moneyguide.org.uk). Information only — not regulated financial advice.