PRESS RELEASE
In a landmark decision that has implications for millions of car finance customers and the entire motor finance industry, the UK Supreme Court has handed down its judgment in Johnson v FirstRand Bank and related appeals ([2025] UKSC 33), ruling that car dealers do not generally owe a fiduciary duty to customers when arranging car finance.
The court unanimously allowed the lenders’ appeals in the Hopcraft and Wrench cases, finding that the dealers’ receipt of undisclosed commissions did not give rise to claims in either tort or equity.
However, in a partial victory for consumers, the Supreme Court upheld Mr Johnson’s case under the Consumer Credit Act 1974 (CCA). It affirmed that the relationship between Mr Johnson and the lender (MotoNovo Finance, part of FirstRand Bank) was unfair due to the size of the undisclosed commission and the lack of transparency around the commercial ties between the dealer and FirstRand Bank. Under those arrangements, the dealer was required, in the first instance, to give priority to FirstRand Bank products when offering finance to its customers.
This conflicted with the contents of a suitability document provided to Mr Johnson, which suggested that the dealer would carry out an assessment of his demands and needs and provide an illustration of the finance option that best met his individual requirements.
Commenting on the decision, Craig Leigh, Founder and Managing Director of 8PP Barristers & Associates, said:
“While the success of the lenders’ appeals on the tort and equity claims will come as a significant blow to many consumers – especially those whose cases involved modest fixed commissions and no meaningful commercial ties between the lender and dealer – this ruling is far from the end of the road for complaints about commission payments in PCP and HP finance arrangements.
“There will undoubtedly be cases – potentially in large numbers – where the facts closely mirror those in Mr Johnson’s case. These may involve significant commissions that were either inadequately disclosed or paid under commercial agreements between lenders and dealers, the nature of which was not properly explained to consumers. In such situations, consumers were denied the information they needed to make informed choices about the finance arrangements offered to them.
“The FCA’s announcement that it will clarify its intentions regarding a possible redress scheme before the markets open on Monday 4 August is, in my view, a welcome and necessary step.
“I see nothing in the Supreme Court’s judgment that prevents the FCA from moving ahead with some form of redress. Whatever course it takes, stakeholders won’t have long to wait.”
Key points from the judgment:
- No fiduciary duty: The Supreme Court confirmed that car dealers do not owe afiduciary duty to customers in arranging credit – overturning the controversial 2024 Court of Appeal ruling
- Tort of bribery upheld, but the nature of the duty clarified: The Court refused to abolish the tort of bribery but limited its scope, holding that it only applies where the dealer owes a full fiduciary duty, which was not present in the cases. In doing so, the Supreme Court overturned the decision of the Court of Appeal in Wood v Commercial First Business Ltd which has previously held that the existence of a fiduciary duty was not required, just a duty to be impartial and to provide disinterested advice, information or recommendation
- Partial disclosure has never been enough: The court disavows the reasoning of the Court of Appeal in Hurstanger Ltd v Wilson in relation to disclosure and the negating of secrecy. What is required is disclosure of all material facts and what amounts to material facts will depend on the circumstances of a particular case. So, the inclusion of a term that states that commission may be payable may be insufficient to negate secrecy of the payment
- Rescission at common law upheld as a remedy available as of right in cases of bribery: This is subject to the strict common law requirements for counter-restitution
- Regulatory regime matters: The Court emphasised that the regulatory framework (e.g., FCA rules) assumes arm’s-length commercial relationships and does not treat dealers as fiduciaries
- Unfair relationship upheld (Johnson): Mr Johnson’s success under section 140A of the CCA highlights that customers may still seek redress where, amongst other things, commission payments are excessive, undisclosed, and paid in circumstances where the lender and car dealer concerned have contractual ties that are not adequately explained.
Implications: While the decision reins in expansive consumer claims under tort and equity, it leaves the door open for redress under the CCA where transparency and fairness are in question. The Financial Conduct Authority is expected to clarify its position on an industry-wide redress scheme early next week.
ENDS
About 8PP Barristers & Associates
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