November 5, 2025

Daniel Lee

The tide is turning on motor finance — and the industry’s spin is finally unravelling

Response to the APPG on Fair Banking’s report: “Car Finance Scandal: Assessing Redress (Nov 2025)”

For years, lenders and their misinformed lapdog cheerleaders insisted there was “no harm here”, warned of economic Armageddon if consumers were compensated, and lobbied for a redress model they could control. The All-Party Parliamentary Group (APPG) on Fair Banking’s report cuts through that noise and is damning on the industry and the regulator. It sets out, in black and white, the scale of the wrongdoing, the weaknesses in the FCA’s proposed scheme, and the familiar playbook of delay-and-dilute that echoes past scandals — including PPI — with GAP insurance mis-selling now looming in parallel.

Scale: this was not a niche compliance hiccup

On the FCA’s own numbers, the affected population runs to tens of millions of motor finance agreements since April 2007, with a very substantial proportion likely to be assessed as unfair, even under the regulator’s tests. That is systemic by any measure.

The redress model: conflicted, complex, and too cheap

The APPG is clear: the FCA’s proposed scheme, as drafted, is not fit for purpose. It falls short on fairness, transparency, independence and timeliness. It lets lenders act as judge and jury, deploy subjective rebuttals, and keep the key documents — forcing consumers to climb steep evidential hills that the wrongdoers themselves control. That is not an independent system; it is a self-policed rerun of what went wrong with earlier mis-selling schemes.

On quantum, the FCA’s “blended” methodology (repaying some commission plus a modelled loss) drags awards well below court, and even FOS benchmarks, before the scheme’s ridiculously low compensatory interest is even applied. In the FCA’s own worked examples, outcomes that would score materially higher under court/FOS comparators are cut down under the scheme’s model.

The proposed compensatory interest is set at a blended rate far below the long-standing 8% simple benchmark used by courts and the Ombudsman. That choice alone removes billions from consumers. Calling that “proportionate” simply privileges sector balance sheets over restitution.

The result is perverse: on the APPG’s figures, lenders could pay out £8.2bn against the excess profits of £15.6bn from the mis-selling — emerging £7.4bn in pocket even after redress. That is a green light to mis-sell again, and this is what will happen.

The truth about “no harm”

The claim that consumers weren’t harmed — or that you must look at the “whole package” (car mats and paint protection included) — withers under the report’s facts. Consumers were misled, loans were overpriced, and vulnerability correlated with harsher outcomes. The law does let decision-makers take a broad view, but the evidence of detriment is now overwhelming.

Industry doom-mongering hasn’t stood up

When senior executives warned that compensating victims would make the UK “uninvestable,” they produced no cogent economic analysis whatsoever. Markets barely flinched even as provisions rose. The rhetoric doesn’t match reality.

How we got here: a decade of slow walking

The FCA concluded years ago there was a real problem and eventually banned discretionary commission arrangements (DCAs) in 2021 — but only after years and years of consumer harm, and five long years after it was brought to its attention by a whistleblower. The dither and delay pushed many victims towards a limitation cliff-edge, repeating mistakes seen in earlier redress episodes.

Meanwhile, the heart of the wrongdoing — non-disclosure — is not in dispute. In large samples of DCA files, disclosure to consumers never happened. That is the culture the courts and Parliament have now had to address.

Why this matters — and why GAP insurance is next

The APPG situates motor finance alongside PPI: different products, same pattern — opaque commissions, conflicted distribution, and mass detriment. Many of the same firms are involved; the playbook is familiar.

That’s precisely why GAP insurance — routinely sold alongside finance and often embedded or lender-financed — demands scrutiny. The same sales environment that tolerated discretionary rate-setting, undisclosed commissions and “dealer-first” incentives in finance also nurtures mis-selling risks for add-ons like GAP. Once you accept that a vast share of finance agreements failed basic fairness tests — with non-disclosure as a central vice — it becomes untenable to pretend GAP was insulated from the culture that produced those outcomes.

What a credible fix must include

Independence: remove lender control over eligibility and rebuttals. Use an arms-length body or tribunal model.
Transparency: publish key supervisory findings and explain how industry lobbying shaped the methodology.
Full restitution: align quantum with court/FOS comparators and restore a meaningful compensatory interest rate, not a token blend.
Deterrence: issue headline grabbing substantial fines to lenders involved to deter future mis-selling.
Access to representation: stop nudging consumers away from legal/CMC support while firms marshal in-house teams and hold the documents.

Bottom line

The industry narrative is collapsing. The APPG has documented a scandal of historic scale, identified why the current scheme under-compensates and fails the independence test, and shown how familiar tactics — “no harm,” economic alarmism, and procedural friction — are being redeployed. With GAP insurance sales intertwined with this ecosystem, the next scandal is not speculative; it’s predictable and it is happening. The only way to restore confidence is an independent, transparent, consumer-first redress model that pays what was taken — with interest that actually compensates.

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October 8, 2025

Daniel Lee

FCA Redress Scheme Failings

The FCA’s Redress Maths: why the “average‑of‑two” formula short‑changes consumers and neuters deterrence

Opinion piece from Your Money Claim

For years lenders and brokers pocketed hidden commissions and loaded increased borrowing costs onto motor finance customers. The FCA itself now accepts and admits that “many firms did not comply with the law,” with millions losing out. The systemic unlawful behaviours is a damning reflection on the FCA itself. Yet the calculation method proposed in its consultation (CP25/27) provides those same firms with a golden handshake — and consumer kick.

The sleight of hand: paying consumers the average, not the sum

Under the scheme, the overwhelming majority of people will not receive all of the overcharged interest, including the undisclosed commission. Instead, the FCA proposes to pay the average of two figures — and then add only simple interest at Bank of England base rate + 1%. In plain English: consumers do not get back everything you were wrongly made to pay.

Reality check: If the “extra interest” you paid on your motor finance agreement was £1000, of which £400 was the undisclosed commission, the FCA default payout becomes the average of the two, thus £700 (+ a low simple‑interest add‑on) — not £1,000 plus fair interest.

The FCA even acknowledges that consumers may not receive what they may expect in court.

**A double discount: low simple interest**

The FCA also proposes simple (not compound) interest at base + 1% per year — modelled at a weighted average of about 2.09%. This is yet another decision in favour of lenders, and the removal of any form of deterrent for historical wrongdoing. Think about it, if lenders have used the monies they unlawfully obtained to lend at an interest rate of 10 percent (for example), but only have to refund 2.09%, the lenders win again at the expense of consumers.

Regulatory failure, collusion or corruption in broad daylight?

This structure of the redress scheme has clearly been created to protect the motor finance sector, and those that have acted unlawfully, rather than to restore consumers faith by paying fair compensation. The FCA says it is “balancing” court judgments with its evidence base; in practice the balance falls away from full restitution:

Averaging ensures consumers seldom receive both components of harm (overcharged interest and undisclosed commission).
The interest add‑on is pegged to base + 1% (simple), yielding ~2.09%, encourages mis-selling.

When a regulator knows many firms acted unlawfully yet sets a calculator that under‑compensates, the signal to the market is grim: non‑compliance pays — That’s the opposite of deterrence.

“Orderly” for whom?

The FCA says a scheme is the best way to deliver redress “while protecting the integrity of the market” and keeping administrative costs low. Operational orderliness isn’t a defence for under‑compensation. Consumers shouldn’t bankroll “market integrity” by absorbing permanent losses born of lenders’ and brokers’ systemic unlawful behaviour.

A fairer starting point (the bare minimum for fairness)

Repay all of the additional overcharge interest paid where applicable, plus any remaining undisclosed commission — with interest on top.
Repay all of the commission for overtly large commission, or loyalty / volume commission arrangements – with interest on top.
Raise the interest add‑on above base + 1% (simple), or at least add uplifts for long delay and vulnerability; the current modelling uses ~2.09%.
Adverse inference for missing records: if lenders can’t evidence disclosure or commission data, use the average data to calculate refunds – with additional interest on top.

Our view

We make no allegation of proven corruption. But when a regulator knows many firms acted unlawfully and then proposes a calculator that systematically under‑compensates consumers to seek an “orderly” conclusion, it points to a short settlement with the industry rather than justice for the public. Perception matters. Trust matters more.

If the FCA’s goal is to “draw a line,” the line should be a clear deterrent to misconduct with fair compensation and substantial financial penalties. As things stand, misconduct and unlawful activities are being actively encouraged by the regulator itself. We’ve had PPI and motor finance mis-selling, with huge profits generated and retained, and the next scandal will be brewing without a clear deterrent. The consultation is open. The calculation method must change.

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October 7, 2025

Daniel Lee

FCA to release motor-finance redress details

After-hours drop: FCA to release motor-finance redress details today — and why a legal challenge is likely

The FCA is set to publish details of its motor-finance redress scheme after markets close today. From our discussions with stakeholders and the FCA, coupled with recent FCA publications, we expect at least one legal challenge to follow quickly — arguing that the proposed design under-compensates consumers.

What we know (and what’s coming tonight)

The regulator plans to set out the scope, eligibility and calculation methodology for redress covering historic illegal and/or unfair commission practices in motor finance (including discretionary commission arrangements). The announcement is timed for after the market close to give firms, investors and consumer groups space to digest the detail before trading resumes.

Where the fights will be

How redress is calculated. The FCA’s suggestion of an average award of £950.00 directly contradicts it’s previous submission that consumers were overcharged by £1,100.00 on average. Critics and representatives will argue this under-prices detriment where pricing discretion and sales incentives inflated costs.
Eligibility and evidence. Precisely which agreements and years are covered — and what proof is required — will be decisive. Narrow scope or burdensome proof standards will be challenged. Some lenders have been actively deleting data and documentation in an attempt to avoid paying compensation on the basis of a lack of evidence.
Process vs outcomes. A streamlined scheme is welcome, but if simplicity trades away fairness, the courts are likely to be asked to intervene.

Why we expect a legal challenge

The methodology and assumptions behind the scheme will be tested from day one — especially if typical payouts look low relative to the scale of the issue.
Any approach that doesn’t fully account for pricing discretion, sales incentives and affordability impacts risks being viewed as under-compensatory.
Given the scale of consumer impact, representative bodies are primed to challenge a scheme they consider too narrow or too shallow.

What happens next

Expect a consultation window, followed by final rules and an implementation timetable. We’ll consider tonight’s documents — eligibility, redress formula, timelines, and routes for challenging outcomes — along with our view on where consumers stand, and will be in direct contact with the FCA on 9th October 2025 following an invitation.

Our view: A credible scheme must price fairness properly, not just process it neatly. If the design released tonight under-compensates, a legal challenge is not just possible — it’s likely.

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September 18, 2025

Daniel Lee

GAP Insurance: A Fresh Discretionary-Commission Scandal

GAP Insurance: A Fresh Discretionary-Commission Scandal Hiding in Plain Sight

A recent complaint response has confirmed a Discretionary Commission Arrangement (DCA) on a GAP insurance sale—and shows the dealer charging well beyond a stated 50% commission ‘cap’ agreed by the GAP distributor.

This is exactly the kind of incentive structure that has been discovered and resulted in the motor-finance commission scandal.

It points to yet more evidence of a systemic culture of mis-selling across GAP insurance add-ons that, in our view, regulators have not recognised.

GAP insurance and its other known names

GAP insurance is designed to cover the costs of any outstanding finance balance in the event a vehicle is written off or stolen.

On the face of it the insurance can be beneficial but just as with PPI it has been subjected to hidden commission incentives and sold to drive huge profits.

GAP insurance is sold under different guises and names, such as:

Guaranteed Asset Protection (GAP)

Shortfall Insurance / Total Loss Shortfall Insurance

Negative Equity Cover

Return to Invoice (RTI)

Vehicle Replacement Insurance (VRI)

Finance GAP / Finance Shortfall Insurance

Contract Hire GAP (CHG) / Lease GAP

Return to Value (RTV) / Back to Invoice/Value

Agreed Value GAP

Purchase Price Protection (PPP)

Auto Equity Protection

The smoking gun

In the document we’ve received, the distributor explains that it set the net price of the policy and applied a 50% commission cap allowance, leaving the dealership to decide the actual commission it would receive. It then cites hard numbers from the case:

Net price of the GAP policy provided by the insurance distributor: £85.00
Total price paid by the consumer: £151.50
Implied commission / markup: £66.50

That’s a 78.2% uplift on the net price, and £24 above what a 50% cap (£42.50) would allow—clear evidence of discretion and over-charging in practice.

Why this matters: once a dealer is given latitude to “pick” the commission within a cap, they have a direct financial incentive to inflate the premium—precisely the dynamic that fuelled Discretionary Commission Arrangements in motor finance.

Why this looks like motor finance commission all over again

Dealer discretion over price = conflicted sales. The person “recommending” the cover controls their own reward.
Opaque pricing. Customers see a single figure at the desk; the net/commission is hidden, so informed consent is impossible.
Weak suitability checks. Add-on insurances are often sold at speed, with limited demands-and-needs assessment and scant disclosure of exclusions or duplication.
Harm is scalable. If one dealership is doing this, the model can repeat across multiple dealerships over years, multiplying consumer detriment.

How widespread could this be?

Let’s be candid, this will not be a one off case that we have uncovered.

GAP has been a high-margin, high-volume add-on for many years.
Distributors / administrators seem to set a net price, giving dealerships opportunity to inflate commission and profits.
If “up to 50%” discretion is written into commercial terms, many retailers will use it—and sometimes exceed it, as the case above proves.
Even after 2015’s add-on rules (e.g., deferred opt-in for GAP), commission structures often survived behind the scenes; the sales choreography changed, the incentives clearly didn’t.

Our view: this pattern could be industry-wide, spanning multiple dealerships groups and administrators over a long period.

Where’s the FCA in all this?

The FCA’s forced intervention on discretionary commission has (so far) focused on motor-finance credit.

GAP commission within insurance add-ons appears to have received far less attention—despite identical incentive risks and consumer harm.

On the face of the clear evidence we’ve seen, it looks like another regulatory blind spot that now warrants urgent scrutiny.

What this means for consumers (and claims)

If you bought GAP at a dealership, there’s a real prospect you overpaid due to hidden commission.
Redress isn’t just the premium—it can include contractual interest charged on financed premiums, plus statutory interest.
Creditors may share liability where the GAP premium was financed (e.g., under s56/75 CCA), mirroring the path taken in motor-finance commission claims.

Mis-selling culture created over decades

When an insurance distributor or underwriter hands pricing discretion to a dealership and a case then shows the dealership blowing past even that overly generous commission cap, you don’t have an isolated mistake—you have a design problem.

That’s the hallmark of industry wide systemic mis-selling on a huge scale.

The Supreme Court passed clear judgment with respect to discretionary commission arrangements, which now appear to have been used in the sale of insurance products as well as motor finance agreements.

The sooner this is treated with the same seriousness as PPI and motor-finance DCA, the better it will be for consumers.

Source document confirming the 50% cap, the dealer’s discretion, and the £85 vs £151.50 figures is on file.

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September 12, 2025

Daniel Lee

Barclays Drops FOS Judicial Review: What It Means for Redress

Barclays’ FOS U-turn? What dropping the judicial review would mean for fair redress

Barclays has withdrawn its legal challenge against the Financial Ombudsman Service (FOS) decision, which upheld a client’s complaint about motor finance mis-selling.

Having lost at the High Court Barclays had sought to challenge the decision at the Court of Appeal despite their case facing an obvious defeat.

Why a withdrawal is telling

It avoids a calculation benchmark in open court. The High Court already backed FOS last year. An appeal judgment could have clarified how redress is calculated—typically a transparent “difference-in-interest” approach—setting a precedent across thousands of cases. Withdrawing sidesteps that clarity and avoids a legal precedent.
It keeps the path clear for the Financial Conduct Authority’s (FCA) redress scheme. The FCA is planning a potentially controversial central scheme soon. A court opinion pointing to fairer calculation for consumers could clash with the FCA’s more conservative, averaged methodology, which aims to protect the motor finance industry.
It follows a reshaped legal landscape—without absolution. Recent rulings narrowed some arguments but left clear routes to redress for millions of consumers. The remaining battleground is the maths, not whether consumers deserve compensation.

The stakes: how the maths should get done

Refund the difference between what the customer paid at the charged APR and what they would have paid at the lowest permissible rate (often the “no-commission” rate).
Refund the remainingundisclosed commission, paid by the lender to the dealership as an incentive to increase the APR.
Then add appropriate interest on the overpayment.

What a weak FCA scheme risks doing

Protects the motor finance industry over consumer rights by failing to provide fair compensation to consumers.
Penalises consumers where firms’ records are incomplete, instead of requiring reconstruction using average figures as per the PPI scandal
Encourages future mis-selling by failing to provide clear financial deterrents, including substantial fines.

Was Barclays “guided” to step back? The optics certainly aren’t great

With Barclays withdrawing its appeal at this late stage, it looks like behind-the-scenes choreography to avoid an appellate judgment that cements robust redress maths.

That suspicion grows when the regulator, which has been very quiet about the case, is gearing up a central scheme, signalling relatively modest average payouts, and when CMCs and legal firms are pressing for transparent, case-accurate calculations.

What the FCA must do—now

Publish the calculation method, not just headlines. Use a clear, auditable difference-in-interest formula. Where data is missing, require firms to reconstruct from other sources; don’t let poor records shrink compensation.
Issue fines for the illegal activities which have been confirmed by the Supreme Court judgment.
Keep individual rights alive. No scheme should be encouraged where courts can justify higher redress.
Require firm-by-firm transparency. Publish each lender’s methodology, error rates and assurance results to show who is paying customers properly.

What this means for consumers—and how we’ll help

If your finance agreement predates 28 January 2021, you may be affected—especially where the dealer could tweak the APR via discretionary commission.
If your finance agreement included overtly large commission payments you may still be due compensation even if you took out the agreement after 2021.
If your finance agreement was provided to you as a result of loyalty or volume commission incentives you may be due compensation.
We’ll keep building evidence-led claims so your redress reflects your overcharge, even if this means court is the best route.
We’ll challenge any rules that under-compensate or excuse missing data the lender was obliged to keep.

References & context (toggle)

Recent court listings and judgments concerning Barclays vs FOS.
FCA communications about a forthcoming car-finance redress scheme.
FOS redress practice on interest-rate overcharge (difference-in-interest + interest).
Ban on discretionary commission effective 28 January 2021.

Note: This post reflects our analysis as at the date above. For updates or press enquiries, contact our team.

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September 5, 2025

Daniel Lee

FCA Silence on Lender Fines in the Motor Finance Scandal

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.

The FCA must focus on the systemic culture of mis-selling in the finance sector. CMCs and law firms once again uncovered the issue—taking cases to the Ombudsman and the courts. We strongly support high standards in our own sector; but focusing scrutiny on the helpers instead of sanctioning the root cause sends the wrong signal.

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.

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The Compensation Claim Experts

The tide is turning on motor finance

Scale: this was not a niche compliance hiccup

The redress model: conflicted, complex, and too cheap

The truth about “no harm”

Industry doom-mongering hasn’t stood up

How we got here: a decade of slow walking

Why this matters — and why GAP insurance is next

What a credible fix must include

Bottom line

The sleight of hand: paying consumers the average, not the sum

A double discount: low simple interest

Regulatory failure, collusion or corruption in broad daylight?

“Orderly” for whom?

A fairer starting point (the bare minimum for fairness)

Our view

After-hours drop: FCA to release motor-finance redress details today — and why a legal challenge is likely

What we know (and what’s coming tonight)

Where the fights will be

Why we expect a legal challenge

What happens next

GAP Insurance: A Fresh Discretionary-Commission Scandal Hiding in Plain Sight

GAP insurance and its other known names

The smoking gun

Why this looks like motor finance commission all over again

How widespread could this be?

Where’s the FCA in all this?

What this means for consumers (and claims)

Mis-selling culture created over decades

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**A double discount: low simple interest**