A landmark case currently unfolding in the UK Supreme Court has the potential to uncover widespread mis-selling and hidden commissions in the car finance industry, sparking a potential £43 billion reckoning. The case, Johnson v. FirstRand Bank Ltd, has raised serious concerns about the lack of transparency in Personal Contract Purchase (PCP) agreements and the financial burden it has placed on consumers.
At the centre of the debate is the question of whether car finance lenders have been systematically failing to disclose essential commission details, leaving consumers to bear the brunt of hidden costs. The case has garnered the attention of major players, including Labour’s Shadow Chancellor Rachel Reeves, representing billions of pounds, and organisations advocating for consumer rights. Sentinel Legal, the UK’s leading consumer rights law firm specialising in car finance mis-selling claims, is at the forefront of the fight for consumer justice.
“The car finance industry is facing a potential reckoning,” says Sam Ward, Director of Sentinel Legal. “The Johnson case could expose systemic wrongdoing and finally deliver the transparency consumers deserve, but the fact that everyone is scrambling to intervene speaks volumes. They don’t want the truth exposed, and they’ll do whatever it takes to keep it hidden.”
Sentinel Legal’s investigation into PCP agreements has uncovered evidence of widespread mis-selling, with car finance companies consistently hiding commission payments from consumers. In one case involving FirstRand Bank, documents revealed that 43.66% of the total interest charged on a car finance agreement was funnelled into undisclosed commissions. This is in line with findings from the Financial Conduct Authority (FCA), which estimates that since 2007, 31.7 million car finance agreements have been issued, almost all involving undisclosed commission payments. These practices have raised serious concerns about the integrity of the industry and the financial burden it has placed on consumers.
“PCP mis-selling is the PPI scandal of our time,” commented Sam Ward. “Consumers have been kept in the dark about commission structures that directly inflate their costs. This case has the potential to force the industry to adopt far higher standards of transparency, ultimately benefiting millions of motorists.”
The case has also drawn interventions from key institutions, including the UK Treasury, the FCA, and Labour’s Shadow Chancellor Rachel Reeves. While these interventions are presented as efforts to clarify the issue, Sentinel Legal believes they are calculated attempts to protect lenders from accountability.
“The Treasury’s intervention raises serious questions about whose interests are truly being protected,” adds Ward. “Is it the consumers or the powerful financial institutions? Cases like Johnson expose the lengths lenders will go to in shielding their practices from scrutiny.”
Sentinel Legal believes that these interventions, which also include car finance lenders themselves, signal a desperate attempt to protect the industry from accountability and aim to shield lenders from responsibility, conceal damaging evidence, and delay justice.
“The industry’s pushback highlights the need for change,” adds Ward. “This case isn’t just about a single agreement; it’s about tackling a deeply rooted issue that affects millions of UK consumers.”
With the prospect of billions in liabilities, car finance lenders have mounted an aggressive defence, warning that a ruling against them could destabilise the industry. However, Sentinel Legal insists that the real harm lies in the billions already lost by consumers due to these undisclosed commissions.
“It’s not just about protecting their bottom line; it’s about burying the truth. But consumers deserve better – they deserve transparency, fairness, and justice,” says Ward.
A decision in favour of consumers could unlock billions in compensation and force major changes in the car finance sector. With an estimated 31.7 million agreements affected, millions of consumers could come forward with claims. Conversely, a ruling in favour of lenders risks entrenching the opaque practices that have long plagued the industry.
Sentinel Legal is urging motorists to carefully review their car finance agreements and seek expert advice to uncover hidden commissions. The firm’s dedicated team of specialists is ready to help consumers identify undisclosed fees and secure the compensation they deserve.
“If you’ve been mis-sold a car finance agreement, now is the time to take action,” says Sam Ward. “This case marks a pivotal moment for the industry. We’re committed to standing with the British public, holding lenders accountable, and ensuring consumers reclaim what’s rightfully theirs.”
Derick is an experienced reporter having held multiple senior roles for large publishers across Europe. Specialist subjects include small business and financial emerging markets.