UK Supreme Court Rules on Motor Finance Commission in Hopcraft Appeals

What the court decided

The court held that the dealers did not owe customers a fiduciary duty of undivided loyalty, because their position as sellers dealing at arm's length was incompatible with such a duty. It also rejected the Court of Appeal's alternative basis, a so-called disinterested duty, and held that the tort of bribery is not engaged where there is no fiduciary duty. The customers' equitable and bribery claims therefore failed in all of the transactions before the court.

Mr Johnson succeeded on a different basis. The court held that his relationship with the lender was unfair under section 140A of the Consumer Credit Act 1974. It pointed to the size of the undisclosed commission, £1,650.95, which was 55% of the total charge for credit, the failure to disclose it and the concealment of a commercial tie between the dealer and the lender. The court ordered that the commission be paid to Mr Johnson with interest at an appropriate commercial rate from 29 July 2017. The Hopcraft and Wrench claimants obtained no relief.

Why it matters

The judgment narrows the legal routes available to motor finance customers. Claims based on fiduciary duty or bribery are unlikely to succeed against dealers in comparable arrangements, while unfair relationship claims under the Consumer Credit Act will turn on the facts, including the size of the commission, what was disclosed and whether any tie between dealer and lender was hidden.

What happens next

The Financial Conduct Authority said it was analysing the judgment and would confirm before markets open on Monday 4 August whether it will consult on an industry-wide redress scheme. It said that any proposed scheme would be the subject of wide consultation and would aim to be fair to consumers while supporting a well-functioning motor finance market, which the regulator says around 2 million people rely on each year.

Sources

• UK Supreme Court: Hopcraft and another v Close Brothers Ltd and others [2025] UKSC 33
• Financial Conduct Authority: FCA reaction to Supreme Court motor finance judgment