Supreme Court Ruling on Motor Finance Commissions: What Dealers Must Know in 2025

staceywaller
Aug 25
4 min read

Updated: Sep 12

The Supreme Court’s landmark decision in the Hopcraft, Wrench, and Johnson motor finance cases has delivered long-awaited clarity for the industry. While the ruling removes a significant portion of financial risk for motor dealers and lenders, it also places a renewed focus on commission disclosure, fair treatment of customers, and compliance with FCA rules.

With the FCA preparing an industry-wide redress scheme, motor dealers and finance providers must act now to ensure they remain compliant and protected.

The Supreme Court’s Decision — At a Glance

On 1st August 2025, the Supreme Court overturned two of the three Court of Appeal decisions relating to motor finance commission claims, ruling that:

Motor dealers do not owe a fiduciary duty when arranging finance.
Claims of “secret commissions” and “bribery” are no longer automatically valid where dealers fail to disclose commissions.
However, the Johnson case succeeded under Section 140A of the Consumer Credit Act (CCA), confirming that unfair relationships remain a live compliance risk.

This ruling is being hailed as a “victory for common sense” — but it also sets out clear new expectations for dealers and lenders.

Why the Supreme Court Rejected Fiduciary Duty Claims

The Court clarified that, in a typical three-party hire purchase arrangement (dealer, lender, customer):

Dealers act primarily as sellers rather than advisers.
As sellers, they are entitled to act in their own commercial interests.
This means they do not automatically owe customers a fiduciary duty requiring “single-minded loyalty”.

Key Takeaway for Dealers:

Failing to disclose a commission does not automatically make it a bribe. However, non-disclosure can still contribute to an unfair relationship claim — particularly where commissions are high, discretionary, or tied to lender agreements.

The Johnson Case and Ongoing Compliance Risks

While most claims were dismissed, Mr Johnson’s case succeeded under Section 140A CCA. The Supreme Court identified several red flags that made the lender-customer relationship unfair:

High commission levels — Johnson’s commission was ~55% of the credit cost.
First-refusal lender agreements — The Trade Centre Wales was contractually tied to offering business to one lender, but this was not disclosed.
Vulnerable consumer factors — Mr Johnson didn’t read his agreement and was deemed “unsophisticated”.
Regulatory considerations — Failure to meet disclosure standards under the FCA’s CONC rules increased perceived unfairness.

Why this matters: Even without fiduciary duties, high undisclosed commissions combined with customer vulnerability still create significant compliance risk.

FCA Redress Scheme: What Dealers Need to Know

On 3rd August, just two days after the ruling, the Financial Conduct Authority (FCA) announced its intention to launch a consultation on an industry-wide redress scheme.

What We Know So Far

Consultation launch: October 2025
Duration: 6 weeks
Scheme implementation: Expected in 2026
Estimated total cost: £9bn – £18bn
Average compensation: Likely under £950 per agreement
Scope: FCA intends to backdate claims to 2007, but this faces resistance from industry bodies

This figure is far lower than the £40bn previously feared, which prompted share price jumps for lenders like Close Brothers and Lloyds Bank after the announcement.

FCA Crackdown on Claims Management Companies (CMCs)

The FCA and the Solicitors Regulation Authority (SRA) have jointly warned CMCs and law firms about misleading advertising around motor finance claims.

Over 225 promotions have been amended or withdrawn.
Some firms suggested consumers could claim thousands — now unlikely given the ruling.
With the FCA’s planned redress scheme, customers won’t need CMCs to secure compensation.

What Motor Dealers Should Do Now to Stay Compliant

To stay compliant and avoid future risk, motor dealers should act immediately:

Review Commission Structures - Identify any high or discretionary commissions and assess potential exposure.
Enhance Disclosure Practices - Ensure customers are clearly informed where commission may impact their decision.
Audit Historical Arrangements - Be prepared to provide lenders with commission data when the FCA’s redress scheme launches.
Train Your Teams - Update finance and sales staff on new compliance expectations, particularly around customer vulnerability.
Leverage Compliance Tools - Utilise platforms like ComplianceTrak and InsightTrak to monitor, document, and enhance compliance.

How ComplianceTrak Supports Dealers with Compliance

With the Supreme Court ruling and the FCA’s upcoming redress scheme, compliance has never been more critical. ComplianceTrak combines powerful software and expert consultancy to keep dealer groups compliant, protected, and ahead of regulatory change.

Streamlined Compliance Software – Our platform manages the entire compliance journey, guiding your teams through processes, capturing key documents, and providing instant audit-ready evidence.
InsightTrak for Customer Outcomes – Monitor customer vulnerability, evidence fair treatment, and generate real-time compliance reports to meet FCA expectations.
Expert Compliance Consultancy – Our specialists review your processes, identify risks, and provide clear, actionable advice to protect your business and reputation.
Training & Support – Through OnTrak, we deliver tailored training that keeps your teams confident, competent, and compliant.

With ComplianceTrak, you gain more than software — you gain a strategic compliance partner helping you stay in control, prepared, and ahead of the curve.

Final Thoughts: Preparing for FCA Changes and Future Risks

The Supreme Court’s ruling has provided welcome clarity — but it hasn’t eliminated compliance risk. With the FCA’s redress scheme on the horizon and continued focus on customer outcomes, transparency, and robust processes are essential.

ComplianceTrak will continue to monitor developments and support our clients with up-to-date insights, practical tools, and expert guidance.