Cheltenham, 23 January 2025 – A landmark Supreme Court case is set to shake up the UK car finance industry, potentially leading to a £43 billion reckoning. The case, Johnson v. FirstRand Bank Ltd, brings to light widespread allegations of hidden commissions in Personal Contract Purchase (PCP) agreements, leaving consumers to bear the financial burden of undisclosed costs.
At the heart of the debate lies a fundamental question: Are car finance lenders failing to disclose essential commission details, resulting in consumers being unfairly burdened with hidden costs?
The case has garnered significant attention from major players, including Labour’s Shadow Chancellor Rachel Reeves, lenders representing billions of pounds, and consumer rights organizations. Leading consumer rights law firm Sentinel Legal is at the forefront of the fight for justice on behalf of consumers.
According to Sentinel Legal’s Director, Sam Ward, “The car finance industry is facing a potential reckoning. The Johnson case could expose systemic wrongdoing and finally deliver the transparency consumers deserve. The fact that everyone is scrambling to intervene speaks volumes. They don’t want the truth to be revealed, and they’ll do whatever it takes to keep it hidden.”
Sentinel Legal’s investigation into PCP agreements has uncovered shocking evidence of widespread mis-selling, with car finance companies consistently hiding commission payments from consumers. In one case involving FirstRand Bank, documents revealed that a staggering 43.66% of the total interest charged on a car finance agreement was funneled into undisclosed commissions. Despite this damning evidence, the bank continues to deny any wrongdoing.
This revelation is consistent with findings from the Financial Conduct Authority (FCA), which estimates that 31.7 million car finance agreements have been issued since 2007, with almost all involving undisclosed commission payments. This lack of transparency has raised serious concerns about the integrity of the industry and the financial burden it has placed on consumers.
According to Ward, “PCP mis-selling is the PPI scandal of our time. 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 drawn interventions from key institutions, including the UK Treasury, the Financial Conduct Authority (FCA), and Labour’s Shadow Chancellor Rachel Reeves. While the intervention is framed as a clarification effort, Sentinel Legal believes it is a calculated attempt 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 the recent interventions, which also include car finance lenders themselves, signal a desperate attempt to protect the industry from accountability and aims 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.”
Facing 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 Supreme Court ruling in favour of consumers could unlock billions in compensation, forcing major changes in the car finance sector. With an estimated 31.7 million agreements affected, millions of consumers could step forward with claims. Conversely, a decision favouring 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, Director of Sentinel Legal. “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.”