Supreme Court Appeal: Johnson & Others v FirstRand Bank Ltd & Another

The appeal arises out of three joined cases in which the claimants purchased second-hand vehicles valued under £10,000.00 via hire-purchase agreements, arranged by car dealers acting as credit brokers. In each case, the claimants were each offered only one offer of finance by their dealer, which was accepted (FirstRand Bank Ltd t/a MotoNovo Finance was the lender in the cases of Mr. Johnson and Mr. Wrench, and Close Brothers Limited in the case of Ms. Hopcraft). The claimants later discovered that as well as receiving profit from the sales, the dealers had also received commissions from the lenders for arranging the finance, with no or insufficient disclosure of this commission.

In Ms. Hopcraft’s case, the commission was entirely secret. In Mr Wrench’s and Mr Johnson’s cases, there was partial disclosure - the standard terms made a vague reference to possible commissions, and Mr Johnson signed a form indicating acknowledgment of the possibility of a commission being paid, though without any detail. At the time, car dealers were also incentivised to increase interest rates in return for larger commissions—a practice known as Discretionary Commission Arrangements since banned by the Financial Conduct Authority (FCA) in January 2021. However, this particular aspect of the sales model does not form part of the issues in this appeal.

The claimants each brought County Court proceedings against their respective lenders, arguing that the car dealers had breached their fiduciary and/or “disinterested” duties as brokers, and that the undisclosed or inadequately disclosed commissions rendered the finance relationships unfair. In Wood v Commercial First Business Ltd [2019] EWCA Civ 471 and Novoship (UK) Ltd v Mikhaylyuk [2014] EWCA Civ 908, defining “disinterested duty” as the requirement to act impartially and without gain, the courts stressed that fiduciaries must act solely in the company’s (or in this case, the customer’s) interest, and not their own.

The legal journey in this case, has since been complex. Mr Wrench won at first instance before losing on appeal; Mr Johnson succeeded at both levels; and Ms. Hopcraft initially lost but ultimately succeeded in the Court of Appeal, which allowed all three appeals in a joint decision in October 2024.

It is that decision which the lenders now appeal to the UK Supreme Court.

Key Issues Before the UK Supreme Court

Over three days of submissions, the Court dealt with five central questions:

1. Do car dealers acting as credit brokers owe consumers a fiduciary and/or disinterested duty when providing information, advice or recommendations?
2. If such a duty exists, do commission payments amount to “secret” commissions that render the lenders primary wrongdoers?
3. Can the lenders be liable in tort for bribery, and, if so, what is the correct remedy?
4. Even where some disclosure was made, was it insufficient to obtain the consumer’s informed consent—making the lender liable as an accessory to the broker’s breach of duty?
5. Can the failure to disclose (or to make sufficient disclosure) render the credit relationship “unfair” under the Consumer Credit Act 1974?

The appellants were represented by Mark Howard KC for Close Brothers Limited and Laurence Rabinowitz KC for FirstRand Bank Ltd.

The lenders contended that car dealers do not owe fiduciary or “disinterested” duties to consumers in this context. Rather, their primary role is to sell vehicles, with the finance merely incidental or secondary to the main transaction. Even if they are technically acting as credit brokers, the nature of the relationship is adversarial, not fiduciary. They further argued that there was no undertaking of loyalty sufficient to give rise to fiduciary obligations, citing that the dealers acted as agents of the lender, not of the consumer, and were not remunerated by the consumer.

Distinguishing earlier cases relied on by the claimants, such as Wilson v Hurstanger Ltd [2007] EWCA Civ 299 and Wood v Commercial First Business Ltd [2019] EWCA Civ 471, Counsel for the lenders emphasised that those decisions involved brokers paid directly by and acting explicitly for consumers, rather than sellers brokering finance as an ‘add-on’ to a sale. Such a relationship was defined as one where the dealer had a single-minded interest, much-like a sommelier or a shop assistant, as Counsel for Close Brothers Limited analogised, who aids a customer but is not expected to work in their sole interests.

On the issue of bribery, the appellants maintained that the commission payments were legitimate, arms-length commercial arrangements, not secret inducements, and therefore not within the scope of the tort of bribery. They also argued that the general reference to commissions, or in the case of Mr. Johnson’s signed acknowledgment that one “may” be paid (within the financial suitability form), was enough to displace secrecy, and informed consent was not required in line with existing legal standards.

Robert Weir KC, for the respondents, argued that car dealers arranging finance acted as brokers and thereby owed fiduciary or, at the very least, “disinterested” duties to consumers. These obligations required full disclosure of any commission received from the lender, including its amount and nature, so that consumers could make properly informed decisions.

Counsel relied on the principle that fiduciary duties arise when one party places trust in another who is expected to act solely in their interest, quoting cases such as Rukhadze and others v Recovery Partners GP Ltd [2025] UKSC 10. He argued that the significant influence exercised by dealers over the choice of finance product created just such a relationship. Using the same analogous examples of the sommelier and shop assistant he set out to distinguish that relationship to that of a car dealer acting as broker. A sommelier will provide wine options to a customer, allowing them to make that selection and not giving rise to an undertaking of loyalty by the sommelier. However, a finance broker will take on a fundamental role in the decision-making process of the customer by using their judgment to select a finance option or lender, to which the customer does not have access or input until the final options are presented to them.

Citing Wilson v Hurstanger Ltd, Counsel underlined that the Court of Appeal had previously found that a broker’s failure to disclose a lender-paid commission gave rise to a breach of fiduciary duty. Similarly, in FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, the Supreme Court held that secret commissions received by an agent are held on trust for the principal.

Counsel further submitted that the receipt of undisclosed commissions could amount to bribery, especially in a consumer finance context, and called attention to the power imbalance and the reliance consumers place on brokers to help in decision-making processes. He also argued that even where vague references to commissions existed, the absence of meaningful information meant there was no “informed consent,” rendering the lenders liable as accessories to the brokers’ breaches.

Finally, the respondents relied on section 140A of the Consumer Credit Act 1974, arguing that the non-disclosure of commissions rendered the credit relationships “unfair” in law, entitling the Court to grant remedies under its wide-ranging powers.

The appeal also saw submissions from two interveners.

Counsel for the Financial Conduct Authority (FCA), focused on the importance of transparency and fairness in consumer credit markets. She argued that while the FCA does not regulate car dealers directly, the regulatory framework supports robust disclosure requirements, particularly where agents are incentivised in ways that may not align with consumers’ interests. She warned that the Court’s approach to fiduciary and disclosure duties in this case could have wider implications for financial services regulation and consumer trust.

On the other hand, Counsel for the National Franchised Dealers Association (NFDA), urged the Court not to impose onerous fiduciary obligations on car dealers, particularly in circumstances where they are not acting as financial advisers and are not remunerated by the consumer. Kirk submitted that extending fiduciary principles to dealer-broker relationships would create significant commercial uncertainty and risk deterring participation in the motor finance market. He stressed that current FCA regulation already provides sufficient consumer protection through its post-2021 ban on Discretionary Commission Arrangement models, and further anticipated implementations to monitor compliance more closely.

The UK Supreme Court’s decision expected later this year (possibly within the next 3-4 months), will have far-reaching implications across the car finance industry, and potentially beyond. If the respondents succeed, thousands of consumers could seek redress for undisclosed commissions in past finance agreements. Equally, if the appeal is allowed, lenders and dealers may be shielded from a potential wave of historic liability. The FCA has already indicated that it will announce whether it will propose a redress scheme for customers (and how it will work) within 6 weeks of the judgment being handed down.

The case tests the balance between commercial pragmatism and fiduciary principles, and raises fundamental questions about the nature of fairness, transparency, and trust in consumer credit markets. It is anticipated that the judgment will be released in or around July 2025, but it is certain that whichever way the judgment falls, it will be one of the most significant consumer finance rulings in recent history.

 Karolina Szymanska, Pupil Barrister, 25 Canada Square Chambers