| Important: KaelTripton is not a claims management company. This guide is for information only. We do not handle claims, are not regulated by the FCA as a CMC, and do not recommend any specific claims management firm or solicitor. You can claim directly with your lender at no cost, and escalate free of charge to the Financial Ombudsman Service if your lender rejects your complaint. Most consumers do not need a CMC to claim. |
On 1 August 2025, the UK Supreme Court delivered its judgment in three conjoined motor finance appeals. The cases, Hopcraft v Close Brothers Limited, Johnson v FirstRand Bank Limited, and Wrench v FirstRand Bank Limited, had been closely watched by millions of car finance customers, the lending industry, and regulators alike. The ruling both narrowed and refined the legal landscape for motor finance claims. In plain terms: the Supreme Court overturned the Court of Appeal's broad findings based on fiduciary duty and bribery, but upheld one claimant's case on the basis that his credit relationship was "unfair" under the Consumer Credit Act 1974. The judgment has since prompted the Financial Conduct Authority to publish a final industry-wide redress scheme (Policy Statement PS26/3, March 2026), covering agreements entered into between 2007 and 2024. That scheme has itself been legally challenged as of May 2026, though the FCA has stated it will defend its position. You do not need to use a claims management company to claim. This guide explains the full legal chain, from county court to Supreme Court, and what the current regulatory position means for you.
The chain of cases: from county court to Supreme Court
The litigation that culminated in the Supreme Court's August 2025 judgment began with three separate county court proceedings involving ordinary consumers who had purchased vehicles using dealer-arranged finance. Each claimant had a credit agreement with either FirstRand Bank Limited (trading as MotoNovo Finance) or Close Brothers Limited. In each case, the dealer who arranged the finance received a commission from the lender, a payment that was not clearly disclosed to the borrower.
The first case involved Amy and Carl Hopcraft, who bought a car through a dealership that arranged finance from Close Brothers. In the Hopcrafts' situation, no commission disclosure was made at all. The second and third cases involved Andrew Wrench and Marcus Johnson, both of whom financed cars through MotoNovo Finance. In both those transactions, the lender's standard terms and conditions referenced the existence of a commission of unspecified amount, but Mr Johnson also received and signed a "Suitability Document" from the dealer stating that it worked with a panel of 22 lenders and recommended the product that best met the customer's needs, a statement that turned out to be materially misleading given the dealer's contractual tie to FirstRand.
Each claimant initially brought proceedings at county court level. The cases were appealed and eventually consolidated, making their way to the Court of Appeal, which heard them together in October 2024. The conjoined appeal reference is Johnson v FirstRand Bank Ltd and others [2024] EWCA Civ 1282, available through the judiciary.gov.uk judgments portal.
What the Court of Appeal decided in October 2024
The Court of Appeal's October 2024 judgment came as what the Supreme Court itself later described as a shock to the car finance industry. The Court of Appeal found in favour of all three consumers on grounds that lenders had not anticipated and which went beyond the existing regulatory framework.
On the first ground, the Court of Appeal held that car dealers acting as credit brokers owed their customers a "disinterested duty", a duty to provide information, advice or recommendations on an impartial basis, and an ad hoc fiduciary duty requiring them to act with loyalty and avoid conflicts of interest. This duty existed, the Court of Appeal reasoned, because customers placed trust and confidence in the dealer's recommendations about finance products.
On the second ground, the Court of Appeal held that where a commission was fully undisclosed (as in Hopcraft), it amounted to a bribe in the legal sense, engaging the civil tort of bribery, for which the lender bore primary liability. On the third ground, in cases involving partial disclosure (Wrench and Johnson), the Court held lenders liable in equity as accessories to the credit broker's breach of fiduciary duty. The Court of Appeal further confirmed Mr Johnson's claim under section 140A of the Consumer Credit Act 1974, which governs "unfair relationships" between creditors and debtors.
The ruling was significant because it extended potential liability well beyond agreements containing a discretionary commission arrangement (DCA). Any undisclosed or inadequately disclosed commission, whether the dealer had discretion over the interest rate or not, could potentially give rise to a claim. Lenders appealed immediately to the Supreme Court.
The Supreme Court hearing and ruling
The Supreme Court heard the appeals in April 2025. The formal citation for the judgment is Hopcraft v Close Brothers Limited; Johnson v FirstRand Bank Limited; Wrench v FirstRand Bank Limited [2025] UKSC 33. The judgment was delivered on 1 August 2025 and, unusually, was released after market hours to reduce the risk of disorderly trading in lender shares.
The Supreme Court's ruling was, on the primary legal questions, a substantial win for lenders. The court reversed the Court of Appeal on both the bribery claim and the fiduciary/equity claim. The justices held unanimously that car dealers in standard motor finance transactions did not owe a fiduciary duty to customers. The reasoning was grounded in commercial reality: each party in a car finance transaction, customer, dealer, and lender, was engaged at arm's length in pursuit of separate and potentially competing objectives. A dealer's role as a credit introducer did not transform that relationship into one requiring undivided loyalty to the customer.
Because no fiduciary duty arose, the Supreme Court also rejected the Court of Appeal's reasoning on the tort of bribery. The court confirmed that the civil wrong of bribery does exist in English law, but held that it requires a fiduciary relationship to be engaged. Since dealers were not fiduciaries of their customers in these transactions, commissions paid by lenders to dealers could not constitute bribes in the legal sense.
However, the Supreme Court did not deliver a complete victory for lenders. It upheld Mr Johnson's claim under section 140A of the Consumer Credit Act 1974, finding his relationship with FirstRand to be "unfair." The basis for that finding was fact-specific and rested on three identified factors: the size of the commission paid to the dealer (£1,650.95, representing approximately 55% of the total charge for credit); the misleading nature of the Suitability Document, which suggested the dealer worked impartially across a panel of lenders when it was in fact contractually tied to FirstRand; and the lack of adequate disclosure of the commercial tie between the dealer and lender. The court awarded Mr Johnson the commission amount plus interest but declined broader remedies such as rescission of the entire agreement.
"Secret commission" vs DCA: the legal distinction
Much of the coverage around car finance claims has focused on Discretionary Commission Arrangements (DCAs), the specific commission structure that the FCA banned with effect from 28 January 2021 under Policy Statement PS20/8. Under a DCA, the dealer had the power to set or adjust the interest rate the customer paid, and their commission from the lender was proportional to (or otherwise linked to) the rate they set. This created a direct financial incentive to charge customers a higher rate. The FCA's 2017-2019 motor finance review identified DCAs as a significant cause of consumer harm and the ban followed.
A "secret commission" or "undisclosed commission" is a broader common-law concept. It refers to any commission payment made by a lender to a dealer that was not disclosed to, or was inadequately disclosed to, the customer, regardless of whether the dealer had any discretion over the interest rate. The Court of Appeal's October 2024 judgment had the effect of bringing non-DCA arrangements into scope for potential claims by applying fiduciary duty analysis. The Supreme Court's August 2025 ruling substantially narrowed that expansion: it rejected fiduciary duty and bribery as the legal route to recovery. However, the "unfair relationship" route under section 140A of the Consumer Credit Act 1974 remains open, as Johnson's successful claim demonstrates, and the FCA has explicitly designed its redress scheme (PS26/3) to cover both DCA and non-DCA commission arrangements.
This is an important distinction for anyone considering whether their agreement may be in scope. Eligibility for the FCA redress scheme does not require that your agreement contained a DCA. It requires that commission was paid by your lender to the broker, that the agreement falls within the covered period (6 April 2007 to 1 November 2024), and that there was inadequate disclosure of at least one of three defined arrangements: a DCA, a high commission arrangement (at least 39% of total cost of credit and at least 10% of the loan), or a contractual tie between lender and broker that gave the lender exclusivity or right of first refusal (except where visible links between manufacturer, dealer and lender existed).
How the ruling affects your potential claim
The Supreme Court's judgment has narrowed, but not closed, the door to redress for motor finance customers. The key practical points are as follows.
The fiduciary duty and bribery routes to recovery have been rejected. Claims brought purely on those grounds are unlikely to succeed following the Supreme Court's ruling. However, the "unfair relationship" route under section 140A of the Consumer Credit Act 1974 remains available and was expressly upheld in the Johnson case.
Whether your relationship with your lender was "unfair" is a fact-sensitive question. The Supreme Court identified commission size, lack of disclosure, and misleading documentation as relevant factors, but was clear that non-disclosure alone does not automatically make a relationship unfair, it is one factor among several. This means that not every claimant will receive redress, and the quantum of any redress will vary depending on the specific circumstances of each agreement.
For most consumers, the most relevant route to potential compensation is the FCA's industry-wide redress scheme under PS26/3, published 30 March 2026. The scheme covers approximately 12.1 million agreements and is designed to identify eligible customers and calculate redress without requiring each individual to bring separate legal proceedings. The FCA estimates the scheme will deliver approximately £7.5 billion in redress, with average payments in the region of £830 per eligible agreement. As of 1 May 2026, the scheme has been subject to legal challenge from both lenders and a consumer organisation, the FCA has stated it will defend the scheme as lawful.
For more detail on the process for making a complaint to your lender or escalating to the Financial Ombudsman Service, see the full guide at Mis-Sold Car Finance UK.
The FCA's response to the rulings
The FCA had been running a market-wide review of motor finance commission arrangements since January 2024, announced via its statement "FCA to undertake work in the motor finance market" (fca.org.uk). At that time, it paused the deadline for lenders to respond to DCA-related complaints, citing the need to manage the review in an orderly manner. The complaint-handling pause was subsequently extended on several occasions, most recently via Policy Statement PS25/18 (December 2025), which extended the deadline for responding to both DCA and non-DCA complaints while the redress scheme was being finalised.
Following the Supreme Court's August 2025 judgment, the FCA moved swiftly. On 7 October 2025, it published Consultation Paper CP25/27, proposing an industry-wide statutory consumer redress scheme under section 404 of the Financial Services and Markets Act 2000. The consultation received over 1,000 responses from consumer groups, lenders, manufacturers, investors, and legal professionals. The FCA published its final rules in Policy Statement PS26/3 on 30 March 2026.
The final scheme covers regulated motor finance agreements entered into between 6 April 2007 and 1 November 2024. To reflect concerns raised during consultation about the legal basis for covering the period before 2014, the FCA implemented two separate but parallel schemes, one covering 6 April 2007 to 31 March 2014, and one covering 1 April 2014 to 1 November 2024. The FCA's stated rationale for two schemes is that if the earlier period is legally challenged on vires grounds, compensation for post-2014 agreements will not be delayed. The scheme covers approximately 12.1 million agreements and the FCA projects total consumer redress of approximately £7.5 billion (down from the consultation estimate of £8.2 billion following adjustments to eligibility thresholds).
The FCA has confirmed that the scheme is free for consumers to use and that lenders bear the costs of identifying eligible customers, calculating redress, and making payments. Consumers who were contacted by their lender before the scheme formally commenced and who complained will be dealt with first. The FCA expects millions of eligible consumers to receive notification of their redress entitlement during 2026, with the vast majority of claims resolved by end of 2027.
What happens next: the regulatory and legal timeline
As of 8 May 2026, the redress scheme has been subject to legal challenge from two directions. Several major lenders, including Mercedes-Benz Financial Services and Volkswagen Financial Services, have challenged the scheme's scope and cost from one side. A consumer organisation called Consumer Voice has challenged it from the other, arguing that the level of compensation is set too low and that consumers may be missing out on additional redress. The FCA published a statement on 1 May 2026 confirming that the scheme has been challenged and that it intends to defend the scheme robustly. The FCA reiterated that an industry-wide scheme remains the fastest and most cost-effective route to fair compensation.
The legal challenges introduce uncertainty about the precise timing of payouts, but the FCA has indicated that it will provide further guidance as matters develop. The implementation periods built into PS26/3, 30 June 2026 for Scheme 2 (post-April 2014 agreements) and 31 August 2026 for Scheme 1 (2007-2014 agreements), may be affected by the litigation.
Separately, the FCA has indicated that it is reviewing claims management company practices in the motor finance space, following concerns about advertising and sales tactics by certain CMCs. This regulatory scrutiny of CMCs is a further reason why consumers should be aware that they do not need to use a CMC or solicitor to access the redress scheme. Lenders are required to contact eligible customers directly, and any compensation awarded under the scheme carries no fee payable to a third party unless the consumer has already signed a fee agreement with a CMC.
Sources and verification
- Hopcraft v Close Brothers Limited; Johnson v FirstRand Bank Limited; Wrench v FirstRand Bank Limited [2025] UKSC 33, supremecourt.uk
- Johnson v FirstRand Bank Ltd and others [2024] EWCA Civ 1282, judiciary.gov.uk
- FCA Policy Statement PS26/3: Motor Finance Consumer Redress Scheme (30 March 2026), fca.org.uk
- FCA Consultation Paper CP25/27: Motor Finance Consumer Redress Scheme (7 October 2025), fca.org.uk
- FCA Policy Statement PS25/18: Changes to handling rules for motor finance complaints (3 December 2025), fca.org.uk
- FCA Policy Statement PS20/8: Motor finance discretionary commission models and consumer credit commission disclosure (July 2020), fca.org.uk
- Consumer Credit Act 1974, Section 140A, legislation.gov.uk
| Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. The FCA's motor finance review is an active regulatory process and details may change. Always verify current procedures, time limits, and your specific eligibility with the relevant lender, the Financial Ombudsman Service (FOS), or the FCA before making any decision. KaelTripton has no commercial relationship with any lender, claims management company, or solicitor named in this article. |
Frequently asked questions
What did the Supreme Court rule on car finance?
The Supreme Court delivered its judgment on 1 August 2025 in three conjoined appeals (Hopcraft, Johnson, and Wrench) concerning undisclosed or partially disclosed commissions paid by motor finance lenders to car dealers. The court overturned the Court of Appeal's findings that car dealers owed fiduciary duties to customers and that undisclosed commissions constituted bribes. However, it upheld one claimant's (Mr Johnson's) case on the basis that his credit relationship was "unfair" under section 140A of the Consumer Credit Act 1974, awarding him the commission amount plus interest. The judgment is cited as [2025] UKSC 33.
What is the difference between a DCA and a "secret commission"?
A Discretionary Commission Arrangement (DCA) is a specific type of commission structure under which the dealer could set or adjust the customer's interest rate, with their commission linked to the rate set. DCAs were banned by the FCA from 28 January 2021 under PS20/8. A "secret commission" or undisclosed commission is a broader concept under common law covering any commission paid to a dealer that was not adequately disclosed to the borrower, regardless of whether the dealer had discretion over the rate. The FCA's redress scheme covers both types of arrangement.
Does the Supreme Court ruling mean I am automatically owed compensation?
No. The Supreme Court was clear that whether a credit relationship was "unfair" under the Consumer Credit Act 1974 is a fact-sensitive assessment. The mere existence of an undisclosed commission does not automatically render a relationship unfair. Relevant factors include the size of the commission relative to the total cost of credit, the extent and nature of any disclosure made, and whether misleading documentation was provided. Most eligible consumers will access potential compensation through the FCA's redress scheme (PS26/3) rather than through individual court proceedings.
When did the Supreme Court issue its ruling on car finance?
The Supreme Court issued its judgment on 1 August 2025. The Supreme Court heard the appeals in April 2025. The cases arose from a Court of Appeal judgment delivered in October 2024 (Johnson v FirstRand Bank Ltd [2024] EWCA Civ 1282), which itself consolidated three separate lower-court cases involving consumers who had purchased vehicles on dealer-arranged finance from FirstRand Bank and Close Brothers.
Will the Supreme Court ruling lead to an FCA redress scheme?
It already has. Following the Supreme Court's August 2025 judgment, the FCA consulted on a redress scheme (CP25/27, October 2025) and published final rules in Policy Statement PS26/3 on 30 March 2026. The scheme covers approximately 12.1 million regulated motor finance agreements entered into between 6 April 2007 and 1 November 2024, where commission was inadequately disclosed. The FCA projects total consumer redress of approximately £7.5 billion. As of May 2026 the scheme is subject to legal challenge, which the FCA has stated it will defend.
Do I need a solicitor to benefit from the Supreme Court ruling?
No. You do not need to use a claims management company to claim. Under the FCA's redress scheme, lenders are required to identify eligible customers and contact them directly. Consumers who have already complained to their lender are automatically included in the scheme unless they opt out. Consumers who have not complained and are potentially owed money should be contacted by their lender by the end of 2026 (for post-April 2014 agreements) or by February 2027 (for earlier agreements). You can also complain directly to your lender at no cost, and escalate free of charge to the Financial Ombudsman Service if the lender rejects your complaint.