The UK Supreme Court has overturned key elements of an earlier Court of Appeal judgment on motor-finance commissions, ruling on 1 August that lenders are not automatically liable for undisclosed commissions paid to car dealers. The decision means compensation will only be due in cases where commissions were both hidden and significant, sharply narrowing the scope of potential redress. In response, the Financial Conduct Authority said it will open a consultation by early October on a redress scheme for motorists who took out affected loans before 2021. The regulator estimates total payouts will range from £9 billion to £18 billion, with individual compensation expected to average less than £950. The FCA expects the first payments to reach consumers next year and emphasised that the eventual bill, including administration, will be shouldered by lenders. The projected cost is well below the industry’s earlier worst-case estimates of up to £44 billion and markedly smaller than the £40 billion paid out over the payment-protection-insurance scandal. FCA chief Nikhil Rathi said the framework should ensure that only the most serious cases of misselling are compensated while allowing the motor-finance market to keep functioning. Investors welcomed the narrower liability. On 4 August shares in Lloyds Banking Group rose 6.8% and Close Brothers surged 30%, while Barclays and other lenders also gained. RBC Capital Markets upgraded Lloyds to “outperform”, arguing that the court ruling removed a major overhang even though banks still face multibillion-pound compensation costs.