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Where Are the Fines? Why “deterrence” keeps failing—and mis-selling keeps returning
On 1st August 2025 the Supreme Court confirmed what many had long suspected – that motor dealerships were acting only in their own interests, and that consumers were often paying far more than they should be paying on their motor finance agreements due to hidden commissions, paid by lenders to dealerships.
So why, after the judgment, have lenders not faced real, public, uncomfortable fines?
As things stand, the regulator has prioritised process over deterrence.
There is a pause on lenders’ complaint deadlines and a consultation on an industry redress scheme—with payments expected later.
Helpful for clean-up; weak at stopping the next scandal.
That is restitution without retribution.
“Deterrents” that didn’t deter: PPI proves the point
We don’t have to look too far back in time, just a few years ago there was the PPI scandal.
The industry paid tens of billions in compensation—the biggest consumer redress exercise in UK history.
But the fines were comparatively tiny when you compare them against how lucrative PPI was to lenders (again, due to huge undisclosed commissions), and so it’s hard to claim fines truly deterred anything.
Profits dwarfed penalties.
Because the economics never flipped, mis-selling didn’t stop—it morphed. After endowment mortgages and PPI came interest-rate hedging for SMEs. And now it’s motor finance.
Different products; same incentives.
Motor finance: restitution, yes—deterrence, still missing
- What happened: Discretionary commission let brokers lift customers’ APRs and take a bigger cut—banned from 28 January 2021. In addition, volume and loyalty commission structures and overtly large commissions have subsequently considered to be unfair by the Supreme Court.
- Where we are: A central redress path is being designed (slowly); however there are concerns that the FCA will seek to protect lenders from paying fair compensation, which will lead to representatives taking cases via legal routes.
- What’s missing: As of now, there have been no lender fines announced for the historic commission practices.
- Who’s in the crosshairs: Not lenders! Public messaging leans heavily on warning consumers about using CMCs or law firms (often citing fees) rather than on penalising the original misconduct.
If deterrence is the goal, fines must bite
Redress is about making people whole, putting them back into the position they would have been without the mis-sale.
Deterrence is about changing future behaviour, ensuring misconduct isn’t repeated.
PPI showed that redress with inadequate fines doesn’t resolve matters—especially when the commission incentives and profits are huge.
A credible response in motor finance would pair the scheme with:
- Targeted enforcement where rules were broken (poor disclosure; unfair treatment)—not symbolic numbers, but penalties that outweigh the gain.
- Senior accountability and prosecutions if criminal behaviour is uncovered.
- Public censures with fixes: data remediation, look-backs, proactive customer contact, and independent assurance.
- A published enforcement timeline alongside the scheme roadmap so consumers aren’t left waiting in the dark.
What we’ll keep doing (and why CMCs matter)
- Building strong, evidence-led cases for consumers—especially where lenders fail to handle complaints fairly.
- Working to identify current and future systemic failings within the finance industry.
- Keeping consumers informed about their rights and how they may be affected by misconduct.
- Explaining options clearly, whether that’s a statutory scheme, Ombudsman route, or court claim.
Our view is simple: Until the cost of breaking rules is higher than the profit from doing it, scandals will repeat. Redress is necessary. Deterrence is essential. Do both.
Quick sources (toggle)
- Regulatory updates on car-finance complaints handling, pause extensions, and scheme consultation.
- PPI redress totals and example enforcement actions (e.g., 2015 fines) illustrating the scale mismatch.
- Historic product issues: endowment mortgages, PPI, SME interest-rate hedging—showing recurring incentive problems.
- Rules banning discretionary commission from 28 January 2021.
Note: This article reflects our analysis at the time of publication. For press enquiries, please contact our team.
