Jurisdiction(s):
United Kingdom

UK Supreme Court to rule on motor finance secret commissions, brokers’ fiduciary duties and unfair relationships, with potential £30bn FCA redress and far-reaching implications for commission-based broking models

Published on: 01 April 2025

Published by a Law360 reporter

Legal News

Article summary

The result of a three-day hearing before the UK Supreme Court may signal a significant shift in how the broking and lending sector views its duties and everyday dealings with customers, said Nicola Pangbourne, a partner at Kennedys. The motor finance sector was jolted in October 2024 when the Court of Appeal firmly decided it was unlawful for car retailers to receive any commission from motor finance providers unless this was fully and transparently revealed to customers, and that they had agreed. Two major banks, Close Brothers Plc and FirstRand Ltd, are contesting the judgment. The Financial Conduct Authority (FCA), which has been examining car credit, has formally been allowed to step in. Chris Webber, a partner at Squire Patton Boggs LLP, called the dispute a major moment for two reasons. In motor finance, it will probably settle whether the FCA redress programme we all expect will be confined to discretionary commission arrangements, or whether it will cover every secret or half-secret commission matter, Webber said. He added that it will also define how broad those groupings of cases are. The FCA has indicated that two million people each year rely on motor finance to buy a car. Analysts at...

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