The UK Supreme Court has delivered its long-awaited judgment spanning three conjoined appeals, a decision set to reshape the legal landscape of motor finance law.
In Hopcraft v Close Brothers Limited, Johnson v FirstRand Bank Limited, and Wrench v FirstRand Bank Limited, the Supreme Court addressed the fundamental question of when undisclosed commission payments from lenders to dealers give rise to a potential legal claim.
Background
The appeals arose from a scenario familiar to millions of car buyers: a consumer visits a dealer, selects a vehicle, and needs financing to complete the purchase. The dealer arranges the finance with a lender, who then pays the dealer a commission for the referral.
The central issue in these cases was that the commission payments were either not disclosed at all or only partially disclosed to the consumers.
The Court of Appeal Decision
The Court of Appeal had previously found in favour of consumers, ruling that dealers owed consumers either fiduciary duties or a duty to provide ‘disinterested advice’ when arranging finance (following the earlier decision in Wood v Commercial First Business Ltd [2021] 3 WLR 395). This decision exposed lenders to potential liability for bribery or for being liable to the consumer in equity as a dishonest accessory to the dealer’s breach of fiduciary duty.
The central question that the Supreme Court needed to address was whether car dealers, when sourcing finance for customers, undertake fiduciary duties requiring them to act with “single-minded loyalty” to the consumers’ interests.
The Supreme Court’s Decision
Rejection of Fiduciary Duties
In a unanimous decision, the Supreme Court (Lords Reed, Hodge, Lloyd-Jones, Briggs and Hamblen) held that dealers do not owe consumers fiduciary duties. Consequently, lenders are not liable at common law for bribery.
The Court found that dealers are sellers pursuing their own commercial interests, and the finance arrangement is secondary to the primary goal of selling a car, rather than being a standalone fiduciary service. The Court stated, “In our view the dealer remains a separate player in the negotiation from start to finish, free to pursue its own interests at arm’s length from the interests of the customer, subject only to the usual common law constraints (e.g. against misrepresentation), and to such regulatory constraints as may from time to time be imposed.” The court found that dealers do not promise to subordinate their own commercial interests to those of the consumer. Vague statements from dealers about finding ‘suitable’ finance cannot be enough to create a fiduciary duty between the dealer and the consumer. The claims for bribery and dishonest assistance in breach of fiduciary duty (equity) on the part of the lender failed for these reasons.
The “Disinterested Duty” Concept Rejected
The Court also rejected the Court of Appeal’s novel concept in Wood of a ‘disinterested duty’—an obligation that the Court of Appeal found was potentially sufficient to support a bribery claim. The Supreme Court affirmed that a claim for bribery requires a breach of a full fiduciary duty and nothing less will suffice.
The Consumer Credit Act Claim Succeeds
Despite the failure of the bribery and fiduciary duty claims, Mr Johnson succeeded with his claim under section 140A of the Consumer Credit Act 1974. This provision empowers courts to examine and remedy ‘unfair relationships’ between a creditor and a debtor.
The Court found the relationship unfair due to:
- Excessive commission: £1,650.95 representing 55% of the total charge for credit
- Non-disclosure: Breach of regulatory requirements to disclose commission
- Commercial tie: The dealer was contractually bound to offer all business to FirstRand first, despite representing itself as offering products from a panel of 22 lenders
The success of Mr Johnson’s Consumer Credit Act claim serves as a warning that excessive and undisclosed commissions can still be challenged where they result in an ‘unfair relationship’. FirstRand Bank Limited was ordered to pay Mr Johnson the value of the commission plus interest.
Conclusion
This landmark decision reshapes motor finance law by establishing that the typical dealer-consumer relationship is commercial, not fiduciary. The judgment brings much-needed clarity to a multi-billion-pound sector that affects millions of consumers. While a clear victory for lenders on the specific issue of fiduciary duties, the decision also reinforces the importance of consumer protection through statutory and regulatory channels, rather than the equitable principles developed for traditional fiduciary roles.
Ultimately, the judgment strikes a balance: it respects commercial realities by not imposing inappropriate fiduciary standards on dealers, while ensuring that consumers retain powerful statutory protections against genuinely unfair practices.
The full implications of this decision will become clearer as the industry adapts to this clarified legal framework and as regulators continue to refine their approach to protecting consumers in the motor finance market. At the time of writing, the FCA is consulting on the motor finance compensation scheme, proposing a potential £9–18 billion redress scheme.
A condensed version of this article was also published in the Scotsman on Monday 18th August 2025.Â
Home > News + events > Supreme Court rules on motor finance commissions: a landmark judgement on lender liability and consumer rights
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Karolina Navickaite
Supreme Court rules on motor finance commissions: a landmark judgement on lender liability and consumer rights
The UK Supreme Court has delivered its long-awaited judgment spanning three conjoined appeals, a decision set to reshape the legal landscape of motor finance law.
In Hopcraft v Close Brothers Limited, Johnson v FirstRand Bank Limited, and Wrench v FirstRand Bank Limited, the Supreme Court addressed the fundamental question of when undisclosed commission payments from lenders to dealers give rise to a potential legal claim.
Background
The appeals arose from a scenario familiar to millions of car buyers: a consumer visits a dealer, selects a vehicle, and needs financing to complete the purchase. The dealer arranges the finance with a lender, who then pays the dealer a commission for the referral.
The central issue in these cases was that the commission payments were either not disclosed at all or only partially disclosed to the consumers.
The Court of Appeal Decision
The Court of Appeal had previously found in favour of consumers, ruling that dealers owed consumers either fiduciary duties or a duty to provide ‘disinterested advice’ when arranging finance (following the earlier decision in Wood v Commercial First Business Ltd [2021] 3 WLR 395). This decision exposed lenders to potential liability for bribery or for being liable to the consumer in equity as a dishonest accessory to the dealer’s breach of fiduciary duty.
The central question that the Supreme Court needed to address was whether car dealers, when sourcing finance for customers, undertake fiduciary duties requiring them to act with “single-minded loyalty” to the consumers’ interests.
The Supreme Court’s Decision
Rejection of Fiduciary Duties
In a unanimous decision, the Supreme Court (Lords Reed, Hodge, Lloyd-Jones, Briggs and Hamblen) held that dealers do not owe consumers fiduciary duties. Consequently, lenders are not liable at common law for bribery.
The Court found that dealers are sellers pursuing their own commercial interests, and the finance arrangement is secondary to the primary goal of selling a car, rather than being a standalone fiduciary service. The Court stated, “In our view the dealer remains a separate player in the negotiation from start to finish, free to pursue its own interests at arm’s length from the interests of the customer, subject only to the usual common law constraints (e.g. against misrepresentation), and to such regulatory constraints as may from time to time be imposed.” The court found that dealers do not promise to subordinate their own commercial interests to those of the consumer. Vague statements from dealers about finding ‘suitable’ finance cannot be enough to create a fiduciary duty between the dealer and the consumer. The claims for bribery and dishonest assistance in breach of fiduciary duty (equity) on the part of the lender failed for these reasons.
The “Disinterested Duty” Concept Rejected
The Court also rejected the Court of Appeal’s novel concept in Wood of a ‘disinterested duty’—an obligation that the Court of Appeal found was potentially sufficient to support a bribery claim. The Supreme Court affirmed that a claim for bribery requires a breach of a full fiduciary duty and nothing less will suffice.
The Consumer Credit Act Claim Succeeds
Despite the failure of the bribery and fiduciary duty claims, Mr Johnson succeeded with his claim under section 140A of the Consumer Credit Act 1974. This provision empowers courts to examine and remedy ‘unfair relationships’ between a creditor and a debtor.
The Court found the relationship unfair due to:
The success of Mr Johnson’s Consumer Credit Act claim serves as a warning that excessive and undisclosed commissions can still be challenged where they result in an ‘unfair relationship’. FirstRand Bank Limited was ordered to pay Mr Johnson the value of the commission plus interest.
Conclusion
This landmark decision reshapes motor finance law by establishing that the typical dealer-consumer relationship is commercial, not fiduciary. The judgment brings much-needed clarity to a multi-billion-pound sector that affects millions of consumers. While a clear victory for lenders on the specific issue of fiduciary duties, the decision also reinforces the importance of consumer protection through statutory and regulatory channels, rather than the equitable principles developed for traditional fiduciary roles.
Ultimately, the judgment strikes a balance: it respects commercial realities by not imposing inappropriate fiduciary standards on dealers, while ensuring that consumers retain powerful statutory protections against genuinely unfair practices.
The full implications of this decision will become clearer as the industry adapts to this clarified legal framework and as regulators continue to refine their approach to protecting consumers in the motor finance market. At the time of writing, the FCA is consulting on the motor finance compensation scheme, proposing a potential £9–18 billion redress scheme.
A condensed version of this article was also published in the Scotsman on Monday 18th August 2025.Â