What the High Court's new ruling means for PCP claims

On August 1, 2025, the High Court delivered a significant judgment that could affect millions of UK drivers who took out car finance through personal contract purchase (PCP) agreements. This follows a long-running investigation by the Financial Conduct Authority (FCA) into unfair commission practices in the motor finance industry.

Background: The unfair commission model

Until 2021, many car finance deals included what were known as discretionary commission arrangements (DCAs). These allowed brokers and car dealers to increase the interest rate on finance deals—often without the customer’s knowledge—so they could earn a higher commission. It’s estimated that around 90% of PCP agreements used this model, leaving consumers significantly overpaying for their car finance.

Recognising this as an unfair and opaque practice, the FCA banned DCAs in January 2021. Then in January 2024, the regulator launched a full investigation, signalling that millions of consumers could be owed refunds for excess interest they unknowingly paid.

The High Court Ruling: What changed?

The High Court’s ruling on August 1, 2025, partially overturned an earlier decision by the Court of Appeal. While it confirmed that many car finance claims remain valid, it also clarified that not all cases involving nondisclosure of commission will result in compensation.

In short: just because a broker didn’t disclose their commission, that doesn’t automatically mean a customer was misled or is owed money. Each case will need to show how the lack of transparency affected the fairness of the deal.

What this means for PCP customers

The FCA has responded by announcing a six-week consultation to define the terms of a new redress scheme, with the goal of launching payouts in 2026.

Key issues still to be finalised include:

Which types of finance agreements will qualify
What level of commission is considered “unfair”
How far back claims can go
How redress amounts will be calculated
How the scheme will be run

While firms don’t yet have to resolve complaints, the FCA is still urging consumers to submit their complaints now to ensure they’re within the time limit and eligible once the scheme launches.

How much could you be owed?

The FCA has estimated that £950 per finance agreement could be repaid to affected consumers. If you had a PCP or other car finance deal before 2021, particularly through a broker or dealership, you might be eligible.