Supreme Court ruling on motor finance commissions

04/08/25

On Friday afternoon, the Supreme Court handed down a unanimous judgment in three motor finance appeals: Hopcraft v Close Brothers Limited; Johnson v FirstRand Bank Limited; Wrench v FirstRand Bank Limited [2025] UKSC 33. Exceptionally, the judgment was delivered after market hours, to reduce the risk of market disorder.

The appeals concerned the legality of undisclosed (or partially disclosed) commissions paid by lenders to motor dealers in car finance transactions. The central issue in the appeal was whether the motor dealers owed fiduciary duties to the claimants, customers who sought to obtain a car. Three claimants brought claims against lenders, seeking relief on various bases.

The claimants succeeded before the Court of Appeal, which held, in a widely-reported judgment, that the motor dealers owed fiduciary duties. The lenders, Close Brothers Ltd and FirstRand Bank Ltd, were granted permission to appeal to the Supreme Court. The FCA was granted permission to intervene.

The Supreme Court ruled as follows:

1. Fiduciary duties and dishonest assistance. The Supreme Court accepted the lenders’ submission that motor dealers do not owe fiduciary duties to consumers. It followed from this that the lenders could not be liable in equity as dishonest assistants of any breach of fiduciary duty.
2. Bribery. The Supreme Court accepted the lenders’ submissions that a precondition of the tort of bribery is a fiduciary duty: contrary to the Court of Appeal’s conclusion, a “disinterested” duty was not sufficient or necessary. However, the Court rejected a submission that, as a result, the tort of bribery should be abolished.  
3. Unfair relationships under s. 140A of the Consumer Credit Act 1974. The Supreme Court ruled that there was an unfair relationship between one of the consumers and the lender on the particular facts of that case. The Supreme Court explained the factors that are likely to be relevant in assessing unfair relationships, adopting those put forward by the FCA.

The case is now the leading authority on the central issue on appeal, of when and why fiduciary duties arise. It also provides authoritative guidance on the tort of bribery (both its elements and its remedies). Finally, the ruling provides welcome clarity about the scope of any consumer claims in motor finance going forward.

The Supreme Court’s judgment is available here.