Motor Finance Supreme Court hearing: The latest viewpoint

Between 1 and 3 April 2025, the Supreme Court heard arguments from consumers, motor finance providers, the Financial Conduct Authority (FCA) and the National Franchised Dealers Association (NFDA) on the controversial issue of secret commissions. 

The Supreme Court has announced that its judgment is likely to be given in July 2025. In this article we outline our early predictions on what the Supreme Court might decide, noting this is not a statement of law, but rather our assessment of the potential outcome.

What is this case about?

Three separate individuals brought claims regarding finance agreements used to purchase cars. The Court of Appeal looked at whether the individuals knew that the dealerships received a commission from the lenders, and whether the dealerships had a duty to notify the individuals that they were receiving a commission payment if the finance deal completed.

The Court of Appeal confirmed, amongst other things, that dealerships have a fiduciary duty to inform consumers about commissions from lenders in car finance agreements and that this information should not be buried in Terms and Conditions. 

You can read more about the background to this dispute here: Car Finance Nightmare? Update on the Court of Appeal judgment.

What is the tort of bribery and does it exist in this case?

The tort of bribery is a legal principle that relates to a breach of trust and fiduciary duty that occurs when an agent secretly accepts a bribe from a third party. This principle is crucial for maintaining integrity and fairness in business and public dealings.

In this case, the tort of bribery principle is being tested to establish whether car finance agreements involved dealerships receiving secret commissions from lenders for arranging finance deals.

At the Supreme Court hearing, the consumers argued that the tort of bribery is well established in English law and should not be changed or abolished. They argued that commissions paid by lenders to dealers were bribes, because those payments create a conflict of interest.

The lenders argued that the tort of bribery does not exist and that the law took a wrong turn. Their position was that bribery only comes into play where the dealers owed a fiduciary duty to the consumers, which they said was not the case here.

We consider it unlikely that the Supreme Court will abolish the tort of bribery, as it is now a well-established legal principle. We consider it more likely that the Supreme Court will seek to clarify when the tort arises, to provide guidance for future cases.

Do car dealers owe fiduciary duties to consumers?

In the context of car finance agreements, a fiduciary duty refers to the obligation of car dealers to act in the best interests of consumers when arranging finance deals. 

The consumers argued that the dealers owed a fiduciary duty to consumers, because the dealers had a role in the consumers’ decision-making process when buying a car on finance. They further argued that consumers put trust and confidence in the dealers and that the dealers had undertaken to act loyally towards the consumers and to provide impartial and disinterested advice – which was undermined by the payment of commission by the lenders.

The lenders argued that the dealers did not owe a fiduciary duty, as they had no power to bind the consumers to any particular transaction and it was instead the consumers’ decision whether to accept the finance offer. A fiduciary duty therefore did not arise, because the car dealers were simply acting in their own interests to sell cars and finance to customers.

We think it is unlikely that the Supreme Court will decide that car dealers have a complete fiduciary duty to consumers. Some judges found it difficult to accept that a dealer selling a car would then suddenly owe a fiduciary duty when arranging finance for the purchase. The Supreme Court seemed to suggest that dealers would need to expressly or implicitly agree to act as fiduciaries to create such a relationship.

Do commission payments breach the Consumer Credit Act (CCA)?

Commission payments were given very little air-time during the hearing. The consumers urged the Supreme Court to decide whether there was an unfair relationship under the CCA on the specific facts of Johnson -v- FirstRand. Their main focus was that the size of the commission payment would usually determine unfairness. On the other hand, the lenders suggested that the dealer-consumer relationship was not unfair in Johnson -v- FirstRand, and that the Court of Appeal had erred in deciding this point.

Despite little development of the parties’ arguments during the hearing, we consider that the CCA may offer a lifeline for consumers in motor finance claims (if the Supreme Court finds in favour of the lenders on the points above), by allowing consumers to pursue claims under the CCA where a very large commission has been paid by a lender to a dealer.

Where does this leave us?

Whilst very difficult to predict at this stage, our feeling is that the Supreme Court is more likely to come down on the side of the lenders and find that the dealers did not owe a fiduciary duty to consumers. This would result (except in the exceptional circumstances flagged above) in the consumers’ claims failing, therefore avoiding the potential opening of the floodgates for these types of claims.