Paying Off Car Finance? You Might Be Owed Money for Hidden Commission (PCP & HP, UK)

If you bought a car on PCP (Personal Contract Purchase) or HP (Hire Purchase) finance — especially before 2021 — there is a real chance the dealer or broker who arranged it earned commission you were never told about, and that in some cases the commission was tied to the interest rate you were charged. That gave whoever set your rate a quiet incentive to push it higher. This has become one of the biggest consumer-finance issues in the UK, but the reality is more nuanced than the "everyone is owed thousands" headlines. Here is what the law actually says, who might have a claim, and how to pursue it for free.

What Went Wrong: Discretionary Commission

For years, many car-finance deals used what the regulator calls a Discretionary Commission Arrangement (DCA). These let the dealer or broker set the customer's interest rate, with their commission rising as the rate rose. The higher the rate they signed you up to, the more they earned — usually without telling you any of this was happening. The Financial Conduct Authority (FCA) banned DCAs on 28 January 2021, so the concern is largely about agreements taken out before that date where commission was undisclosed or inadequately disclosed.

Be clear on one thing from the start: not everyone with car finance has a claim. Whether you may be owed anything depends on whether commission was actually undisclosed and, for DCAs, whether it was linked to your rate. Plenty of finance was arranged perfectly properly.

What the Supreme Court Actually Decided (1 August 2025)

This is where a lot of the noise gets the facts wrong. In Johnson v FirstRand (heard with two other cases) the Supreme Court, on 1 August 2025, narrowed a much broader Court of Appeal ruling from the year before. Crucially, it rejected the sweeping arguments that dealers arranging finance owe customers a fiduciary duty, or that ordinary undisclosed commission automatically amounts to an unlawful "secret commission" or bribe.

It upheld only one of the three claims — Mr Johnson's — and did so on the narrower ground of an "unfair relationship" under section 140A of the Consumer Credit Act 1974, on his particular facts (which included a very high, undisclosed commission). The remedy was to repay the commission plus interest — not to tear up the whole agreement. So the honest takeaway is the opposite of the headline: the court did not rule that all hidden commission is illegal, and it did not mean everyone gets their car finance written off.

The Legal Basis That Survives Regardless: Section 140A

Underneath all the headlines sits a durable route. Sections 140A–140C of the Consumer Credit Act 1974 let a court reopen a credit agreement it finds created an "unfair relationship" between lender and borrower — and undisclosed, rate-linked commission can be part of what makes a relationship unfair. That power exists independently of any regulator's scheme, which is why it matters even as the wider picture keeps shifting.

The FCA Redress Scheme — Confirmed, But Currently in Flux

The FCA has confirmed it is setting up an industry-wide consumer redress scheme for motor-finance commission, aimed largely at DCA and certain other high or undisclosed-commission agreements. In the meantime, the normal eight-week deadline for firms to give a final response to these commission complaints has been paused since early 2024 and extended more than once, feeding into that scheme.

The important honest caveat: the details and timing are still moving. Parts of the scheme have been subject to a live legal challenge, and elements were reported as paused pending a tribunal hearing. So there is no fixed, guaranteed payout date to rely on right now. Before acting, check the latest position at fca.org.uk — the specifics may have changed since this was written.

Who Might Have a Claim

You are more likely to have something worth raising if:

• You took out PCP or HP car finance arranged through a dealer or broker (not a loan you sourced directly yourself);
• The agreement was taken out before 28 January 2021, when DCAs were banned; and
• You were not clearly told about the commission the dealer or broker earned — particularly if it was linked to your interest rate.

None of this is a guarantee that money is owed. It is a reason to ask the questions and put a complaint in.

How to Complain — For Free

You do not need to pay anyone to do this. The route is:

• Complain to the lender first — the finance company named on your agreement, not the dealer. Ask whether commission was paid, whether it was a discretionary arrangement, and whether it was disclosed to you.
• If they reject it or you are unhappy with the outcome, escalate to the Financial Ombudsman Service (FOS). The FOS is free to use.

The FCA and MoneyHelper both warn against claims-management companies that offer to do this for you and then take a large cut — often around a quarter to a third — of anything you recover, for a letter and complaint you can send yourself. Keep the money that is yours.

What to Put in Writing

A clear, factual complaint letter to your lender is the first step: identify the agreement, ask directly whether commission (and specifically a discretionary commission arrangement) was involved and whether it was disclosed to you, and ask them to treat this as a formal complaint. Keep a copy and note the date, so you know when the response deadline runs and when you can escalate to the Ombudsman.