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Car loan scandal: what the supreme court ruling means for UK motorists | UK supreme court

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The supreme court has partly overturned an earlier ruling on the car finance commission scandal – seemingly granting UK banks a reprieve and potentially limiting compensation payouts to those consumers whose cases are more serious.

We explain what this means for car buyers, whether anyone should expect compensation, and what the next steps are.


How did we get here?

The car loans scandal has been rumbling on for more than 18 months but ballooned after a court of appeal judgment that sided with three consumers in October 2024.

Before that point, the Financial Conduct Authority (FCA) was running a narrower investigation into discretionary commission arrangements (DCAs), where motor finance lenders gave dealers the power to set interest rates on car loans. The higher the interest rate, the more commission the dealer received. The controversial practice – which allegedly incentivised dealers to overcharge customers – was eventually banned by the FCA in 2021.

In the meantime, three car buyers took their cases to the court of appeal, which ruled on the much wider issue of how commissions were disclosed. In October 2024, that court sided with the claimants and ruled that it was against the law for the dealers to receive any sort of commission from the lender without first telling the customer and getting their informed consent.


Why was the appeal court ruling so important?

The shock decision had ramifications for all hidden commission arrangements, not just DCAs. Across the UK, 80-90% of new cars, and an increasing number of used vehicles, are bought with the help of a loan, the vast majority of which would be arranged by a broker who is paid commission by a lender.

The judgment threw open the door to a huge compensation bill for car lenders –including Santander UK, Close Brothers, Barclays and Lloyds – that some analysts said could top £44bn. That would be comparable to the payment protection insurance (PPI) saga, which cost banks £50bn. It also raised concerns that other types of loans involving commission payments to brokers could be in play, such as those for appliances and furniture.

The two specialist lenders involved in the court of appeal case, Close Brothers and FirstRand, challenged the ruling in the supreme court, which has now revealed its verdict.


What did the supreme court decide?

It has partly overturned the decision, apparently closing the door to compensation except in more serious cases.

In their ruling, a panel of justices led by the supreme court president, Lord Reed, upheld only one consumer’s case, originally filed by Marcus Johnson. Cases brought by two other consumers – alleging that commissions paid to car dealers were bribes and that dealers owed a duty of loyalty to the customer – were rejected.

The decision will be a blow to many consumers and the claims industry, but the fact that part of the earlier ruling was upheld has complicated the picture and meant that immediately after the verdict, experts had differing views about the potential impact.

Friday’s judgment followed a three-day hearing at the start of April.


What happens next?

We won’t have long to wait to find out. The FCA said on Friday that it wanted to provide clarity as quickly as possible, so it would confirm whether it would consult on bringing in a compensation scheme before the stock market opens on Monday morning.

“Our aims remain to ensure that consumers are fairly compensated and that the motor finance market works well,” it said. “If we do decide to propose a redress scheme, we’ll consult widely.”

Many believe the FCA will announce a central compensation scheme for consumers whose agreements included a DCA. That could add up to many thousands, potentially millions, of vehicle buyers.

The court’s decision to uphold Johnson’s claim has complicated things, however, and could also increase the chances of redress for cases such as his, in which the relationship between the finance company and the customer is deemed to be unfair. What constitutes “unfair” is likely to be the subject of a lot of discussion.

Richard Coates, a partner and the head of automotive at the law firm Freeths, said: “It is anticipated that the FCA will bring redress for those cases where it is deemed that the relationship is unfair, and we expect to learn more from the FCA about this redress scheme within the next six weeks.”

Interested parties, however, could challenge any scheme in court. They will have six weeks to refer it to the upper tribunal, which could put the brakes on any redress programme.

But barring any legal challenge or further delay, the FCA scheme would probably start operating next year, meaning former car-loan customers could start receiving compensation in 2026.


Who could be eligible for compensation?

Those most likely to be eligible are those whose agreement included a DCA, though the FCA could restrict or widen eligibility depending on its own continuing work and its views of the latest judgment.

DCAs were by far the most common commission arrangement before they were outlawed: on average, between 2007 and 2020, about three-quarters of all agreements had a DCA of some sort, says the regulator.

The “end date” for potential eligibility for any redress has been suggested as 28 January 2021, when DCAs were banned.


How much compensation could harmed borrowers end up getting?

This is still unclear and will hinge on the scope of the FCA’s redress scheme – assuming it definitely happens – with more details likely in the coming weeks and months.

The FCA has indicated it would need to balance the interests of consumers, firms and the broader economy when setting up a compensation scheme. The regulator has said that as well as being “fair to consumers who’ve lost out”, any scheme must “ensure the integrity of the motor finance market, so that it works well for future consumers”.

In the case of DCAs, the regulator has estimated that consumers may have been overcharged by £1,100, as a result of paying too much interest on a typical £10,000, four-year car finance deal where this arrangement was used. But whether individuals would get back all or just a part of their “loss” remains to be seen. It could also require firms to pay interest on top of any compensation, which could add up to a lot if it is several years’ worth.

Meanwhile, claims law firms have said some clients were charged much more, amounting to several thousand pounds more in hidden commission.


Should aggrieved consumers use a claims firm?

Social media and websites have been littered with adverts claiming consumers could be entitled to thousands in compensation, and urging them to act fast.

But the FCA and Solicitors Regulation Authority (SRA) are concerned that some firms are not telling consumers about free alternatives, are making bold and sometimes misleading claims about payouts, and are charging fees worth up to 30% of any compensation payout.

Over the past year, the FCA has forced 224 motor finance commission adverts to be changed or pulled entirely, while the SRA is now investigating 73 law firms for potential breaches.

Some claims management companies are merely fishing for customer “leads”, which are then passed on to third-party law firms for a fee.


How has the government reacted?

The Treasury said: “We respect this judgment from the supreme court and we will now work with regulators and industry to understand the impact for both firms and consumers.”

The government has been the target of heavy lobbying by the car loan industry, which had warned that a big compensation bill could force lenders to claw back their losses – resulting in some car finance providers offering fewer or more expensive loans, while others could go bust.

The Treasury has also been concerned that the scandal is deterring investment in the financial services industry, and therefore putting the UK’s economic growth at risk.

The Guardian revealed last week that the chancellor, Rachel Reeves, had been considering overruling the supreme court’s decision with retrospective legislation, in order to help save lenders billions of pounds, in the event that it upheld the entirety of October’s court of appeal ruling. Given Friday’s verdict, that will not happen.



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Medical artificial intelligence (AI) company Lunit announced on the 2nd that it has signed a contrac..

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Supply of Mammography AI Solutions in Spain’s 3rd largest cities with a population of 5 million

Lunit exclusively supplies AI solutions to state breast cancer screening programs run by Spain’s autonomous province of Valencia. [LUNIT]

Medical artificial intelligence (AI) company Lunit announced on the 2nd that it has signed a contract to exclusively supply AI solutions to the state breast cancer screening program operated by the autonomous province of Valencia, Spain.

Through this contract, mammography AI solution ‘Lunit Insight MMG’ and three-dimensional mammography AI solution ‘Lunit Insight DBT’ will be introduced for breast cancer screening operated by Valencia State.

In addition to the supply contract, Lunit and Valencia State plan to explore strategies for early cancer detection and improved health performance in population groups through continuous research cooperation.

Valencia, with a population of about 5 million, is the third-largest metropolitan government in Spain by population and the fourth-largest economy. In particular, it is superior in the field of digital healthcare and AI diagnosis.

The state of Valencia has been considering introducing AI into the state’s breast cancer screening program since last year. Through this, the goal was to significantly expand the number of annual checkups from the current 250,000 to 400,000 while maintaining the quality of medical services.

Valencia State selected Lunit as a result of comprehensive evaluation of diagnostic support capabilities and clinical effects based on integration with the public examination system as a key selection criterion in the bidding for business rights operation.

With its entry into Spain, Lunit will strengthen its position in the global national cancer screening market (B2G). Starting with Australia, it is expanding its global market by operating cancer screening programs in major continents and countries such as Europe (Iceland, Spain), the Middle East (Saudi Arabia, Qatar, UAE), and Asia (Singapore).

“This contract will be an important milestone for Lunit to be recognized in the European public health market and a turning point for AI to become an essential cancer screening tool,” said Seo Beom-seok, CEO of Lunit. “As the partnership with Valencia, which promotes Europe’s best healthcare innovation, we expect it to be a good reference for its spread across Europe in the future.”



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The business benefits and challenges of Agentic AI

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When artificial intelligence (AI) first burst into the public consciousness with the launch of ChatGPT in late 2022, many people saw the technology as a helpful chatbot.

They found an AI-powered chatbot could help with anything from answering a question to generating everything from text to computer code. Popularity and usage grew exponentially.

Fast forward almost three years and things have changed significantly with the emergence of Agentic AI. This technology can perform multi-step tasks, invoke APIs, run commands, and write and deploy code autonomously.

AI agents go much further than responding to prompts – they’re actually making decisions. While this will make the tools even more useful, it also poses security risks. Once an IT system starts taking autonomous actions, safety and control become paramount.

A challenge two years in the making

The challenge posed by Agentic AI was first flagged back in 2023 with the release of the OWASP Top 10 for LLM Applications report[1]. In it the term ‘excessive agency’ was coined.

The argument was that, if an AI model is given too much autonomy, it begins to act more like a free agent than a bounded assistant. It might be able to schedule meetings or book conference rooms, however it could also delete files or perhaps provision excessive cloud infrastructure.

If not deployed and managed carefully, AI agents can start to behave like a confused deputy. They could even become sleeper agents just waiting to be exploited in a cybersecurity incident.

These are more than just idle predictions. In recent real-world examples agents from major software products like Microsoft Copilot[2] and Salesforce’s Slack tool[3] were both shown to be vulnerable to being tricked into using their escalated privileges to exfiltrate sensitive data.

Standards and protocols

During 2025, there has been a wave of new standards and protocols designed to handle the rising capabilities of AI agents. The most prominent of these is Anthropic’s Model Context Protocol (MCP) which is a mechanism for maintaining shared memory, task structures, and tool access across long-lived AI agent sessions.

MCP can be considered as the ‘glue’ that holds an agent’s context together across tools and time. It enables users to tell an agent what they are allowed to do and what they should remember.

While MCP is a much-needed step, it has also raised new questions. This is because the focus with MCP has been on expanding what agents can do, rather than reining them in.

While the protocol helps co-ordinate tool use and preserve memory across agent tasks, it doesn’t yet address critical concerns like prompt injection resistance which is when an attacker manipulates shared memory.

MCP also doesn’t tackle command scoping, where an agent is tricked into exceeding its permissions or token abuse which is when a ‘Leaked Memory Blob’ can be used to expose API credentials or user data.

Unfortunately, these are not theoretical problems. A recent examination of security implications revealed that MCP-style architectures are vulnerable to prompt injection, command misuse, and even memory poisoning, especially when shared memory is not adequately scoped or encrypted.

An issue requiring immediate attention

This is not a problem that can be ignored as it relates to tools that many developers are already using. Coding agents like Claude Code and Cursor are gaining real traction inside enterprise workflows and delivering significant benefits.

GitHub’s internal research showed Copilot could speed up tasks by 55%. More recently, Anthropic reported 79% of Claude Code usage was focused on automated task execution, and not just code suggestions.

This represents a significant productivity boost, but shows the tools are no longer simply copilots – they’re actually flying solo.

Also, it’s not just software development as MCP is now being integrated into tools that extend beyond coding. These cover activities such as email triage, meeting preparation, sales planning, document summarisation, and other high-leverage productivity tasks. 

While many of these use cases are still in their early stages, they’re maturing rapidly, and this changes the stakes. It demands attention from business unit leaders, CIOs, CISOs, and Chief AI Officers alike.

Preparation is essential

As these agents begin accessing sensitive data and executing cross-functional workflows, organisations must ensure that governance, risk management, and strategic planning are integral from the outset. Integrating autonomous agents into a business without proper controls is a recipe for outages, data leaks, and regulatory blowback.

There are some key steps that should be taken. One is to launch agent pilot programs, but also to require code reviews, tool permissions, and sandboxing.

Agent autonomy should also be limited to what’s actually necessary as not every agent needs root access or long-term memory. Developers and product teams should also be trained on safe usage patterns, including scope control, fallback behaviours, and escalation paths.

Organisations that regard AI agents as a part of core infrastructure – rather than novelty tools – will be best placed to enjoy the benefits. The time for considering and acting on the associated challenges is now. 



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Elon Musk announces plans for ‘Macrohard’ company to rival software giant Microsoft: ‘Purely AI’

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Photo Credit: Getty Images

Tech billionaire Elon Musk has once again turned heads, this time by announcing that his AI company, xAI, is working to develop a version of software-giant Microsoft run exclusively on artificial intelligence. 

“Join @xAI and help build a purely AI software company called Macrohard,” Musk posted to his social network X. “It’s a tongue-in-cheek name, but the project is very real!”

While Musk has had a long history of trolling or making proclamations that have never come to fruition, there was some evidence that Macrohard was more than just an online joke. 

The U.S. Patent and Trademark Office website showed that xAI filed a trademark request for “macrohard” on Aug. 1, 2025. 

The application requested exclusive use of the Macrohard name in the arena of “downloadable computer programs and downloadable computer software.”  

In his post, Musk explained why he believed an exclusively AI software company was a realistic possibility. 








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“In principle, given that software companies like Microsoft do not themselves manufacture any physical hardware, it should be possible to simulate them entirely with AI,” he wrote.

Were Macrohard to become its own company, completely AI-run or not, it would become just the latest in a long list of Musk-led ventures, including xAI, Tesla, The Boring Company, SpaceX, Neuralink, and X Corp, according to Business Insider.

Across his many ambitious projects, Musk increasingly has placed his focus on artificial intelligence and robotics. 

Despite Tesla‘s being the No. 1 maker of EVs in the United States, Musk famously has said that Tesla’s self-driving technology was “the difference between Tesla being worth a lot of money and being worth basically zero,” per The Washington Post.  

Further, at a 2024 Tesla shareholder meeting, Musk boasted that he believed the company’s Optimus robot could one day lead the company to a $25 trillion market capitalization, CNBC reported at the time. 

As CNBC pointed out, when Musk made these remarks, the market capitalization for the entire S&P 500 was $45.5 trillion. 

Musk himself has admitted to being “pathologically optimistic,” per CNBC, about his own projects.

It’s difficult to assess the potential energy impact of using AI to create an entire software company and operating system to compete with Microsoft. It may require a lot of energy and cooling resources for data centers to accomplish, though as is always the case with AI, if an AI project can save significant human time that could include human resources such as commuting, food, and drink that could be applied toward enabling people to do other work, at some point the scale can tip — of course, as long as the ends justify the means with a functional product. 

In many cases, people have cited that AI has appeared impressive only to produce many flaws under the surface that rendered its use fruitless for a particular project. A famous example is a viral X post in which user @vasumanmoza jokingly summarized the results of using AI to refactor a code base: “It modularized everything. Broke up monoliths. Cleaned up spaghetti,” they wrote.

“None of it worked. But boy was it beautiful.”

While only time will tell whether Macrohard or some other exclusively AI-run software company poses a risk to the future of tech behemoths like Microsoft, one thing seems certain: Musk will continue to put his significant financial clout and social capital behind AI and robotics. 

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