On 1 August 2025, the Supreme Court delivered its long-awaited judgment in Johnson v FirstRand Bank and the conjoined appeals of Hopcraft and Wrench. The case concerned whether undisclosed or partially disclosed commissions paid by lenders to car dealers in hire-purchase transactions gave rise to liability in tort or equity as well as (in the case of Mr Johnson) liability under the unfair relationship provisions of the Consumer Credit Act 1974 (CCA). The outcome has significant implications for the motor finance industry, consumers, and the broader financial services sector.
The Supreme Court reversed major elements of a controversial 2024 Court of Appeal judgment, relieving lenders of fiduciary-based liabilities while affirming limited consumer protections under the CCA. Most notably, the Court ruled in favour of Mr Johnson in his CCA claim against FirstRand Bank but dismissed the bribery and equity-based claims in all cases.
The key legal issues
The appeals presented a number of key issues:
- Whether car dealers, when arranging hire-purchase finance, owe fiduciary or disinterested duties to customers sufficient to found a claim against the lenders in bribery or dishonest assistance.
- Whether the common law does, or should continue to, recognise a distinct tort of bribery at all.
- If a tort of bribery was to continue to be recognised, what duty relationship engaged the tort of bribery, in particular, whether any duty relationship less than a full fiduciary duty was sufficient.
- The meaning of the requirement for secrecy.
- Whether in a bribery case, the customer would have the automatic remedy against a lender for the full amount of the bribe and with what, if any, requirement for proof.
- Whether a customer has both a common law and an equitable right to rescind in cases of bribery.
- Whether the disinterested duty is sufficient to give rise to an equitable claim, or whether only a full fiduciary duty will do.
- The requirement in a claim for accessory liability for procuring a breach of fiduciary duty requires the establishment that the assistance be dishonest.
- Whether, in relation to Mr Johnson’s claim, the relationship between the lender and Mr Johnson was rendered unfair under section 140A of the CCA.
The Supreme Court’s Findings
No fiduciary duty in standard transactions
The Court held that car dealers engaged in arm’s length commercial sales do not generally owe fiduciary duties to customers. Simply offering to find “the best deal” on finance does not imply a duty of undivided loyalty. Dealers remain sellers pursuing their own interests throughout the transaction.
Bribery tort survives, but scope clarified and narrowed
While rejecting lenders’ arguments to abolish the tort of bribery, the Court limited its application to circumstances involving a genuine fiduciary relationship. A contractual duty to act disinterestedly is insufficient to invoke the tort.
Hurstanger overturned where disclosure and secrecy is concerned
Disclosure must include all material facts, and vague mentions that a “commission may be paid” may not satisfy this requirement. What amounts to material facts will depend on the circumstances of each case.
Rescission as a remedy in bribery claims reiterated
The Court reaffirmed the availability of common law rescission as a remedy available as of right and as a method of self-help in claims involving bribes, subject to the strict condition that the rescinding party provide counter-restitution.
Mr Johnson’s partial victory
The Court upheld Mr Johnson’s claim under section 140A of the CCA due to the large undisclosed commission (£1,650.95 – over 25% of the vehicle’s price and 55% of the interest). This, combined with the lack of proper disclosure and a hidden commercial tie between the dealer and FirstRand, rendered the relationship unfair.
Regulatory and commercial backdrop
The Court considered the role of the Financial Conduct Authority (FCA) and the Consumer Credit Sourcebook (CONC), noting that the regulatory regime does not impose fiduciary obligations on dealers. Section 56(2) of the CCA deems dealers agents of the lender during negotiations, but this does not create fiduciary loyalty toward consumers, rather, it points away from there being a fiduciary relationship between car dealer and customer.
The FCA’s post-2021 ban on discretionary commission models (which allowed dealers to set interest rates within a range) and its oversight of dealer-lender relationships formed the contextual backdrop to the Court’s findings.
Consumer and industry reactions
Consumer groups, while disappointed by the limits on tort and equitable remedies, welcomed the Court’s support for CCA-based redress. Alex Neill of Consumer Voice said, “This ruling doesn’t let lenders off the hook. Billions are still owed to consumers who were unfairly charged.”
Lenders and government, by contrast, expressed relief. Lloyds Banking Group, Close Brothers, and others had collectively set aside over £1.5bn for potential claims. The judgment eased fears of a PPI-scale scandal.
The FCA is expected to announce on Monday (4 August) whether it will implement an industry-wide redress scheme.
Craig Leigh’s Commentary
The decision, whilst undoubtedly a huge blow to some consumers, provides welcome clarity on the issues addressed – in particular, whether a car dealer arranging finance owes the necessary duties to be held liable in equity or in the tort of bribery when receiving commission payments from lenders in connection with arranging finance for consumers.
The Supreme Court quite rightly resisted the lenders’ urge to abolish the tort of bribery, though it did limit its scope to instances where the relationship can properly be said to be fiduciary in nature. This overturned the previous Court of Appeal ruling in Wood v Commercial First Business Ltd, which had held that nothing more than a duty to be impartial and to provide disinterested advice, information, or recommendation was needed.
The Supreme Court also provided helpful clarification on what is required to satisfy the disclosure obligation relating commission payments – namely, nothing less than full disclosure of all material facts. However, it stopped short of determining whether, in these particular cases what was done was sufficient. This leaves open the question of disclosure and the negation of secrecy as fertile ground for future litigation.
The judgment also clarified remedies available in relation to claims brought under the tort of bribery.
Importantly for consumers, in upholding Mr Johnson’s CCA claim the Supreme Court signalled to lenders that they will be held accountable if large commissions have been paid to dealers in circumstances where information has been withheld about the payment or important details of contractual ties in place between lenders and car dealers are obscured.
Undoubtedly, the decision reduces the risk exposure that lenders face as a result of them paying commissions to car dealers, but it by no means extinguishes risk and liability altogether. On the contrary, lenders are potentially still set to face a significant compensation bill because of commissions and contractual agreements not being adequately disclosed, and the nature of some of the commission models creating the risk of dealers being incentivised to charge higher rates of interest for their own commercial gain.
The FCA’s announcement that it will update the market and general public on 4 August 2025 regarding a potential consultation and redress scheme means lenders and consumers alike do not have long to wait.
Conclusion: Where does this leave us?
The Supreme Court has decisively clarified that car dealers do not generally act as fiduciaries when arranging finance, shielding lenders from widespread liability in tort and equity. However, the path to redress under the Consumer Credit Act remains viable in cases of non-disclosure, excessive commissions, or unfair commercial practices.
Claimants are now more likely to succeed by focusing on the statutory framework provided by the CCA rather than relying on common law or equitable doctrines. All eyes now turn to the FCA and the Treasury to see whether broader action will follow.