Marcus Johnson never expected he would be rushing to a car park during a family holiday in Somerset to discuss a ruling by the highest court in the UK. But the 35-year-old factory worker from Cwmbran in south Wales also had little idea that a loan he took out in 2017 to buy a second-hand Suzuki Swift would place him at the heart of a David v Goliath battle.
His case would go on to expose egregious commission practices in the car finance market and lead to a compensation scheme that could cost some of the UK’s largest banks and specialist lenders up to £18bn.
“I thought it would be like when you did those PPI claim forms: you were just going to get a few pounds in the bank in a month or two. That’s what I expected this to be,” Johnson said. “I had no idea it would turn into what it has today. I had no idea the impact it would have.”
What started as interest in a Facebook advert about potential misselling of car loans led to a three-and-a-half year legal battle escalating to the UK supreme court. On Friday, Johnson’s case was the sole one of three consumer complaints left standing, with supreme court judges concerned about his “unfair” treatment by car lenders.
That was due in part to the size of the commission that the lender paid to the car dealer – a quarter of the Suzuki’s near-£6,500 price tag – as well as a failure to disclose that a single lender, in this case South Africa’s FirstRand, was given first dibs on the contract, rather than it being taken to a panel of lenders to secure the best deal.
Johnson admitted that he did not read all the documents that the Cardiff dealership gave him about the blue hatchback. But the supreme court questioned whether it was reasonable to expect “commercially unsophisticated” borrowers to read and understand the terms of the commission buried in reams of fine print.
“It was a very rushed process where they gave me a big box full of paperwork and expected me then to comb through hundreds of pages,” Johnson recalls. “I felt like they were telling me what I needed to know. I had no idea that they were leaving things out.”
Once lawyers explained the terms of his loan, Johnson was floored. “As all the evidence and all the information was presented, I almost found it unbelievable.”
His case, which has dragged through Britain’s legal system since November 2022, exposed the complex and symbiotic relationship between lenders, manufacturers and car dealers in the UK’s multi-billion pound motor finance industry. Between 80% and 90% of new cars in the UK are now bought using borrowed money, with dealers paying commission to lenders. Had the two other cases bundled with Johnson’s claim been upheld, the industry could have faced a massive compensation bill fit to rival the £50bn PPI scandal.
Johnson, speaking during a trip to Butlin’s in Minehead with his six-year-old daughter, said the entire saga had been stressful at times and pushed him out of his comfort zone.
He even gets recognised on the street, thanks to doing TV interviews. “I’m not shy, but I kind of keep myself to myself, so it’s just a bit strange for me.”
However, he feels it is a small price to pay to hold lenders to account. He said one car finance company contacted him in recent months to ask how it could be more transparent with buyers.
Johnson is hoping those changes last, and that the regulator’s new compensation scheme will give money back to consumers who were unknowingly overcharged. “Hopefully it opens up a way for people in my position to be able to get what they should back. I would definitely do it all again.”
Even Andrew Wrench, 61, who lost his case in the same court ruling on Friday, said it was worth the battle. Judges rejected Wrench’s case, alongside another filed by Amy Hopcraft, a nurse, which argued that commissions paid to car dealers amounted to bribes, and that dealers should be acting in customers’ best financial interests.
While it proved a disappointing end to his 26-month court battle, Wrench said family and friends were proud of his work. “My nephew Billy said ‘Look, you’ve highlighted it. You’ve done the right thing. A lot of people respect you for that, and be proud of what you’ve achieved, because there are going to be some compensatory packages for consumers.’”
While Wrench will not get a payout on that single claim, he acknowledged that there could have been sweeping repercussions had his case been upheld. Car lenders have warned that a big compensation bill could push some firms into failure, while others would offer fewer, or more expensive loans, to claw back their losses. That could restrict options for people who relied on credit.
Spooked by the warning, Rachel Reeves subsequently launched a failed attempt to intervene in the supreme court ruling, and warned judges to avoid handing a “windfall” to consumers. The chancellor later considered overruling the supreme court with retrospective legislation, in order to limit a potential £44bn bill.
“I didn’t want anybody to lose jobs. I don’t want the economy to be affected. And the Treasury is already in a mess anyway,” Wrench said. “I wasn’t in it for that, and I wasn’t in it for compensation at all. I was in, from the get-go, [to expose lenders] that were deceitful, dishonest and otherwise.”
But Wrench’s work is not over. He has one more car finance claim to pursue, and has two other unrelated cases – on mortgage terms and diesel emissions claims – making their way through the courts.
In the meantime, he is keeping inspirational figures, such as the underdog lawyer and environmental campaigner Erin Brockovich, in mind. “She risked everything to take on the big boys.”
