Legal Update: The UK Supreme Court Gives Landmark Ruling on Motor Finance Commissions

The Supreme Court ruled that car dealers do not owe fiduciary duties to consumers in standard motor finance arrangements.  Unlike fiduciaries, who must act solely in the client’s interest, dealers pursue their own commercial goals.

The Supreme Court also rejected the argument that consumer trust or vulnerability automatically creates fiduciary obligations.

The Supreme Court clarified that the FCA rules on commission disclosure do not impose fiduciary duties, which overturned the Court of Appeal’s broader “disinterested duty” approach and prior case law, setting a higher bar for fiduciary claims.

The Supreme Court reaffirmed that bribery under English law requires a fiduciary relationship to exist.  Accordingly, as it had been found that car dealers did not owe fiduciary duties to consumers, the bribery claims failed.

While lenders succeeded on the fiduciary and bribery grounds, the Supreme Court upheld the unfairness claim in the Johnson case under section 140A of the CCA. 

Unlike the other cases, Johnson’s agreement involved a discretionary commission arrangement, where the car dealer could set the interest rate within a lender-approved range, thereby increasing their commission. 

The Court found that inadequate disclosure of this high commission created an unfair relationship.

By contrast, in the Wrench and Hopcraft cases, where commissions were fixed or disclosure was minimal, no unfairness was found.  This suggests that discretionary commission arrangements with poor disclosure are more likely to be deemed unfair.

Following the ruling, the FCA announced on 3 August 2025 that it will publish a consultation paper by October 2025 for a consumer redress scheme, expected to be operational in 2026. 

The scheme will address claims involving discretionary commission arrangements and other “unfair” cases with inadequate disclosure, signalling potential ongoing regulatory and legal scrutiny.