Jim Higginbotham considers the Supreme Court’s ruling regarding the commission disclosure cases of Hopcroft, Wrench and Johnson
On Friday 1st August 2025, the Supreme Court published its judgment on the lawfulness or otherwise of the payment of commissions by finance lenders to motor dealers in connection with the provision of finance for the hire purchase of cars where those commissions are fully or partially disclosed or totally undisclosed.
The court dismissed two of the cases (Hopcroft and Wrench) and upheld an individual claim by Mr Johnson, citing an ‘unfair’ relationship based on the size of the commission, the failure to disclose the commission, and the concealment of the commercial tie between the dealer and lender.
Following the Supreme Court judgment, the Financial Conduct Authority (FCA) announced it will consult on a motor finance compensation scheme.
The NACFB’s CEO, Jim Higginbotham, shared an update to NACFB Member brokers, providing his initial thoughts on the ruling and its implications for Members.
Dear NACFB Members,
I wanted to write to you following Friday’s judgment by the Supreme Court regarding the commission disclosure cases of Hopcroft, Wrench and Johnson which have been the subject of much debate and concern since The Court of Appeal decision in October.
I’m sure many of you will have read the press reaction to the judgment over the weekend under headlines such as, ‘Supreme Court rules in lenders favour’ and ‘Millions denied car finance compensation payouts’.
These headlines aren’t particularly helpful, and only serve to overly simplify what was a highly detailed and thoughtful response by The Supreme Court.
We then all heard on Sunday that the FCA is launching a six-week consultation process from early October regarding a market-wide redress scheme for motor finance customers.
Currently, I am somewhat unsure as to how such a nuanced judgment can be adapted into a formulaic redress scheme and we will be working closely with other trade bodies and stakeholders to try and ensure this scheme doesn’t lead to further confusion and uncertainty.
What I would like to convey in this note is not the detailed legal nuances of the judgment but the basic findings of The Supreme Court, the practical implications for you, our Members, and what we, as your trade body, are doing to help support, protect and advocate on behalf of your businesses.
So firstly, to the basic findings.
The court found that the commissions paid in all cases did not constitute a bribe.
- The main reason for this was that it was also found that the specific commercial structure of the tri-party arrangement in motor finance did not give rise to the conditions necessary to create a fiduciary duty on the dealer. Given, by definition, a bribe requires the receiving party to have a fiduciary duty to the customer, any such claims of bribery failed.
The court found that in the case of Johnson vs FirstRand an unfair relationship did exist, and the court found in favour of Mr Johnson.
The main reasons for this related to:
- The size of the overall commission paid to the dealer without the knowledge of the Customer;
- The fact that the agreement suggested the Dealer would select from a range of possible funders to get the best deal but was silent on the fact that there was a right of first refusal arrangement with one particular lender;
- The level of sophistication of the Customer.
So, what conclusions can we draw from the above and how might they impact the wider market?
Firstly, it’s very important to understand that these judgments are specific to three cases relating to unsophisticated customers in the motor finance industry. The Supreme Court went into significant detail to ensure each of the individual circumstances related to these cases were considered in reaching their decision.
To that end there is no way to apply a simple read-across to all the other areas of the commercial finance landscape without considering the individual case specific circumstances of each.
However, there are certain elements coming out of the judgment that can inform our guidance to all Members.
- One area of increased clarity surrounds the previously grey area of partially secret versus fully secret commissions. There is now no such thing as ‘partially secret’ and the obligation is to provide full disclosure of all material facts of the deal to the Customer.
- The existence or otherwise of a fiduciary duty on the broker is going to be case specific and will be impacted by how the contractual relationship between the Broker and the Customer is positioned. For example, is the Broker paid by the Customer, is the Broker acting in the capacity of an agent, what representations are made to the Customer etc.
- The only way to protect against a potential bribery claim here is to ensure full disclosure and to obtain informed consent from the Customer with regard to the amount and nature of any commission received.
Pending increased clarity coming out of the FCA, we recommend you continue to follow our previous advice and guidance which remains unchanged at this time.
We are already in discussions with the FLA to ensure we represent the interests of the industry to best effect during the FCA consultation period and we will be co-ordinating with other interested trade bodies as a matter of priority.
I realise that the specific nature of The Supreme Court judgment leaves many questions about the read-across to the wider industry unanswered.
However, as we work to obtain more clarity I want to try and change the narrative. Our Member brokers provide an invaluable service to their customers and deserve to be paid for their efforts without apology or judgement. Yes, that payment needs to be transparent, fair and proportionate to the service provided but the court of public opinion is demonising the concept of commissions and this needs to change.
Over the coming weeks we will work to achieve as much clarity as possible and will keep you informed every step of the way.
Fundamentally, this judgment is good news for the industry. It is consistent with our ethos of transparency, ethical behaviours and good customer outcomes which underpin our assurance process and demonstrate to the regulator that as an industry we are committed to upholding such standards.
Jim Higginbotham
CEO, NACFB