If you've been following the news about car finance recently, you've probably heard about commission arrangements and potential compensation claims. It's understandable if this has left you feeling uncertain about who to trust when it comes to financing your next vehicle.
Here at Elev8 Finance, we want to help alleviate any concerns by separating fact from fiction around vehicle finance commission disclosure. Our aim is to provide you with complete transparency on this topic - not just because regulation requires it, but because we believe informed customers make better decisions and build stronger relationships with their finance providers.
While there have certainly been practices in our industry that needed addressing, the story behind the headlines is more nuanced than you might expect. It's a complex situation involving regulatory changes, legal interpretations, and evolving commercial practices that have created genuine challenges for both customers and responsible finance providers.
In this article, we’ll walk you through what really happened, why it matters to you, and how the industry is working to rebuild the trust that should be at the heart of every finance relationship.
Before 28 January 2021, the vehicle finance industry here in the UK operated under what seemed, at the time, like a logical system. Lenders allowed brokers and car dealers to adjust interest rates within certain parameters, thus receiving higher commission for higher rates and creating what the FCA (Financial Conduct Authority) called "discretionary commission arrangements" (DCAs).
From the industry's perspective, this had no malicious intent. Instead, it was presented as:
The reality, however, became more problematic than anyone had originally expected. In fact, around 56% of car finance deals included DCAs, with customers unknowingly paying inflated rates while believing they were receiving independent advice.
The FCA's 2021 ban on DCAs was designed to save customers £165 million annually and restore transparency to the market. The industry, to its credit, largely adapted by implementing the following changes across the board:
Yet, unknowingly, the ban created new challenges for the industry. Some legitimate risk-based pricing mechanisms were lost, and the market became more rigid - potentially disadvantaging customers who might have benefited from more flexible approaches.
Despite the 2021 ban on DCAs, complaints continued to mount. In January 2024, the FCA launched a major investigation into historical DCA practices after receiving thousands of complaints from customers who believed they had been overcharged.
The regulator paused the normal 8-week complaint response deadline, giving companies until December 2025 to handle DCA-related complaints while the investigation continued.
Fast-forward three years, and just when the industry thought it had moved past the commission crisis, the UK Court of Appeal delivered a shocking judgment in October 2024 that went far beyond DCAs. This ruling stated that ANY commission paid to car dealers, lenders or brokers required full disclosure and informed customer consent.
The three test cases - Hopcraft, Johnson, and Wrench - revealed fundamental problems - allow us to explain:
→ Case 1 (Hopcraft): Commission kept entirely secret from the customer
→ Case 2 (Wrench): Commission mentioned in small print that "the lender knows the borrower is highly unlikely to read"
→ Case 3 (Johnson): Partial disclosure but without specific amounts or calculation methods
The court found all three approaches unlawful.
It's important to note at this stage that this Court of Appeal ruling went far beyond the banned DCAs - it potentially affected ALL commission arrangements in motor finance, regardless of when they were made. This was a much broader issue than the original DCA problem, which is why it sent such shockwaves through the industry.
Major lenders like FCE Bank set aside £61 million for compensation, while share prices tumbled and some lenders temporarily halted new business. It was a really difficult time for the whole industry - one that everyone was so poorly prepared for.
In the finance industry’s defence argument, there were a number of caveats that contributed to the overall sense of frustration and disappointment we all had. Understandably, many of the affected businesses sought a fairer ruling, based on the following claims:
Following the Court of Appeal's refusal to grant permission to appeal, the lenders petitioned the Supreme Court directly. Recognising the industry-wide implications, the FCA requested expedited proceedings and was granted permission to intervene, emphasising the need for clarity to support their ongoing market review and potential redress scheme development.
The British media's coverage has often painted this as a simple story of greedy finance lenders deceiving innocent customers. While customer protection is paramount, this narrative overlooks several key points, which we’ve outlined below:
99% of car finance deals involve some form of commission
Commission structures fund the advice and service that customers receive
Many customers received genuine value from broker services
The alternative (such as direct lending from the likes of a bank) often provides a less personalised service.
The important point not to overlook here is that the industry operated within FCA guidelines as they existed. The Court of Appeal judgment made no substantive reference to existing regulatory frameworks, creating confusion about what was actually required.
What hadn’t been properly communicated at this stage is that removing all commission-based incentives for lenders and dealerships could reduce competition and increase costs for consumers.
Even the FCA itself acknowledged in this statement: "If many firms were to go out of business... this could reduce competition and could make it more expensive for consumers to borrow money to buy a car in the future".
However, to support the media’s tale of “goodies and baddies”, this vital piece of information was seemingly pushed to the side. It was a story of David and Goliath, and the vehicle finance industry was losing face.
Many vehicle finance lenders genuinely believed they were operating within regulatory parameters. The system wasn't designed to deceive people who were buying cars - it evolved from legitimate commercial needs, including:
The financial crisis in the UK has created several unintended consequences that we feel actually harm consumers in the long run, for example:
In April 2025, the Supreme Court heard appeals from finance companies over three days of hearings. The industry arguments included:
→ Fiduciary Duty Question - Whether car dealers actually owe fiduciary (openness and honesty) duties to customers
→ Bribery Tort Validity - Whether the legal concept of "bribery" applies to standard commercial arrangements
→ Proportional Remedies - Whether automatic compensation is appropriate
→ Regulatory Context - How common law should interact with FCA oversight
The FCA, intervening in the case, took a "middle ground" approach by acknowledging that the Court of Appeal went too far while not fully supporting the lenders' position.
On 1 August 2025, the Supreme Court delivered its much-anticipated judgment, largely overturning the Court of Appeal's decision. The five-justice panel reached several key conclusions:
The FCA, which intervened in the case, welcomed the clarity while noting that a consumer redress scheme remains under consideration.
With the Supreme Court's August 2025 judgment providing much-needed legal clarity, the finance industry can finally move forward with certainty about what's required:
The FCA has indicated it will consult on a consumer redress scheme by early October 2025, with any scheme expected to launch in 2026. The extended complaint handling deadline remains in place until December 2025. Here at Elev8 Finance, we will endeavour to keep you informed.
If there’s one thing we’ve learnt, it's that this crisis offers valuable lessons for forward-thinking finance providers like us. As such, we stand by the following:
1. Transparency Builds Trust
Companies that proactively embrace full financial disclosure will differentiate themselves in a trust-damaged market.
2. Simplicity Wins
Complex commission structures, even if legal, create suspicion nonetheless. By comparison, simple, clear arrangements build confidence.
3. Customer Education Matters
Explaining the value proposition from the off clearly prevents misunderstandings and builds loyalty.
At Elev8 Finance, we've always believed that transparency shouldn't be a regulatory afterthought - instead, it should be a competitive advantage. Our approach includes:
→ Full Commission Disclosure
→ Value-Based Pricing
→ Customer Education
→ Regulatory Leadership
The commission crisis has taught us that regulatory compliance isn't enough - on the contrary, customer trust is the ultimate currency in financial services. Companies that prioritise transparency and genuine customer value will no doubt emerge stronger from this crisis.
Rather than competing on hidden margins and complex structures, we think the future belongs to finance companies that compete on service quality and expertise, product innovation and flexibility, customer experience and transparency, and value delivery rather than value extraction.
Post-crisis, successful vehicle finance companies will need to ensure they implement the following:
→ Supreme Court judgment delivered on 1 August 2025
→ Extended complaint handling deadline in place until 4 December 2025
→ The FCA redress scheme consultation is expected in October 2025
→ A potential redress scheme could be launched in 2026
→ Key requirement: "Fully informed consent" for ALL commission arrangements
The commission crisis is both the motor finance industry's darkest hour and its greatest opportunity for transformation. Yes, mistakes were made. Yes, some customers were disadvantaged. But the solution isn't to destroy the intermediated finance market - it's to fix it.
The companies that will thrive in the post-crisis landscape are those that view transparency not as a regulatory burden, but as a competitive differentiator. They'll build trust through clarity, compete on value rather than opacity, and put long-term customer relationships ahead of short-term profit maximisation.
The choice for everyone concerned is clear: Either continue operating in the shadows of complex commission structures and regulatory grey areas, or step into the light of full transparency and genuine customer value.
The Supreme Court's August 2025 judgment has provided the clarity the industry desperately needed. While car dealers don't generally owe fiduciary duties to customers, the requirement for "fully informed consent" means that transparency is now more important than ever.
At Elev8 Finance, we've made our choice. We believe the future belongs to companies brave enough to be completely transparent about how they operate and honest about the value they deliver - not because the Supreme Court requires it, but because it's simply the right way to do business.
There’s no escaping the fact that the commission crisis has tested the industry's foundation. Now, with legal clarity established, it's time to rebuild it - stronger, clearer, and much more customer-focused than ever before.
At Elev8 Finance, we believe in full disclosure, fair pricing, and genuine value. So if you’re looking for transparent car finance that puts your interests first, then contact our dedicated team to experience the difference transparency makes. Our doors are always open.