Supreme Court motor finance ruling on discretionary commission

The UK Supreme Court’s ruling on motor finance discretionary commission was one of the most important complaint related decisions of 2025. In Hopcraft v Close Brothers, Johnson v FirstRand Bank trading as MotoNovo Finance, and Wrench v FirstRand Bank trading as MotoNovo Finance, the Court was asked to decide whether undisclosed commission arrangements could support claims based on fiduciary duty, bribery, or an unfair relationship under section 140A of the Consumer Credit Act 1974.

The judgment closed the door on fiduciary duty and bribery as the main route forward in these cases. But it did not shut down motor finance complaints. Instead, it made section 140A the key route that firms, complaint teams, and claims specialists now need to understand. That matters because section 140A gives the court a broad and flexible power to look at whether the lender borrower relationship was unfair in the round, rather than focusing only on one narrow legal test.

This article focuses on what the Supreme Court decided, why the case of Johnson mattered, and what the ruling means for section 140A complaints. The FCA’s separate redress scheme is now a story in its own right, so the focus here is the judgment itself and the complaints impact flowing from it.

The background: how discretionary commission worked

Before the Supreme Court ruling, many motor finance complaints centred on the way commission operated between lenders and brokers.

In discretionary commission arrangements, the broker had the power to adjust the interest rate offered to the customer within a lender’s limits. This meant the broker could increase the rate and, in some cases, earn more commission as a result.

This structure became controversial because customers were often not told clearly how the commission worked, how it could influence the broker’s recommendation, or how the broker was being rewarded for arranging the finance.

Commission is common in financial services so the legal question wasn’t simply whether commission existed. The real issue was whether the nature of the arrangement, and the level of disclosure given to the customer, could make the relationship unfair or otherwise give rise to a valid legal claim.

This is what brought the appeals in Hopcraft, Johnson, and Wrench before the Supreme Court.

What the Supreme Court decided

The Supreme Court rejected the first two legal routes advanced in the appeals. It found that the motor dealers were not fiduciaries and that the undisclosed commissions in these cases did not, without more, amount to bribes. This will have given some comfort to lenders.

But that was not the end of the matter.

In Johnson v MotoNovo, the Court ruled in the customer’s favour under section 140A of the Consumer Credit Act, confirming that the lender–borrower relationship was Johnson v MotoNovo, the Court upheld the finding that the lender borrower relationship was unfair under section 140A of the Consumer Credit Act 1974. This is the part of the judgment with the biggest long term impact for complaints.

The reasoning was fact specific, but it matters because the Court pointed to features that strongly supported unfairness in this case. These included:

• very high commission (25% of the loan amount; 55% of the total charges for credit)

• poor and low prominence disclosure of the commission arrangement

• limited customer understanding of how the commission worked and how it could affect the deal offered to them

Just as important, the Court made clear that this was not a closed list. Section 140A gives the court a broad and flexible power to look at the fairness of the relationship as a whole. It does not depend on proving bad faith or misrepresentation first.

This is why the judgment matters so much for complaints. It shifts attention away from narrower legal labels and towards the wider question of whether the relationship was unfair in context.

It also gives firms a clearer sense of where future section 140A complaints are likely to focus: not on labels alone, but on whether the overall relationship was unfair in the circumstances.

Why Johnson matters for section 140A complaints

The Supreme Court ruling didn’t end the wider motor finance story, but it did change its centre of gravity.

By rejecting fiduciary duty and bribery as the main route forward, while upholding unfairness in Johnson under section 140A, the Court made clear where future complaints were likely to focus. For firms, complaint teams, and claims specialists, the key question is now less about older legal labels and more about when the lender borrower relationship becomes unfair in the round.

This matters because section 140A is deliberately broad. It allows the court to consider the relationship as a whole and does not depend on proving bad faith first. In practice, that gives section 140A a much more important role in motor finance complaints than many firms might have expected before the judgment.

The FCA has since confirmed a separate motor finance redress scheme, but that is now a distinct story in its own right. The focus here is the Supreme Court ruling itself and why Johnson matters for section 140A complaints.

Record retention remains a major operational challenge

The FCA has now confirmed that the motor finance redress scheme covers agreements dating back to 6 April 2007. This makes record retrieval an operational headache. Firms may now need to identify whether historic agreements involved a discretionary commission arrangement, a high commission arrangement, or certain contractual ties between lender and broker, and that becomes much harder where files are old, fragmented, or incomplete.

This is especially important because motor finance record retention rules have been extended well beyond the usual complaints record cycle. DISP App 5.3 shows that firms affected by the motor finance rules must retain and preserve relevant records, and the FCA’s later policy changes extended that preservation requirement through to 11 April 2031.

This doesn’t remove the practical problem. For older agreements, especially where the customer relationship ended many years ago, complete records may still be difficult to retrieve. Some firms will be dealing with legacy systems, historic broker arrangements, or files created under older retention practices. This creates evidential risk, operational delay, and the possibility of dispute if customers, claims firms, or the ombudsman challenge a firm’s version of events based on an incomplete file.

What this ruling means for regulated complaint teams

The Supreme Court’s judgment has changed the legal route many motor finance complaints will now follow.

The rejection of fiduciary duty and bribery narrows some of the arguments that had been gaining attention. But the decision in Johnson gives much greater weight to section 140A as the route that now matters most.

For complaint teams and compliance leaders, that means the focus shifts to a different set of questions. Not whether commission existed in the abstract, but whether the overall lender borrower relationship was unfair when looked at in the round.

This is likely to influence how future complaints are framed, how firms assess them, and how cases are escalated or defended.

It also means firms need to be ready for continued scrutiny of disclosure, customer understanding, commission structures, and the wider context in which the finance was arranged. For firms, that increases the importance of clear records, consistent complaint handling, and decision making that can be evidenced properly.

This ruling may have settled the main issues in the appeals, but it is unlikely to be the last word on motor finance complaints. Further disputes are still likely as parties test where the boundaries of unfairness now sit.

Final word: Legal clarity, rbut not the end of the story

The Supreme Court has now clarified some important points. Claims based on fiduciary duty and bribery did not succeed. But Johnson confirmed that a motor finance relationship can still be unfair under section 140A of the Consumer Credit Act 1974, and this remains the most important route many future complaints are now likely to follow.

This matters because the Court was clear that unfairness under section 140A is broad and fact sensitive. The mere fact of non disclosure will not always be enough on its own, but it is part of a wider assessment. In Johnson, the Court attached real weight to the size of the commission, the misleading impression created by the documents, and the customer’s limited understanding of how the arrangement worked. This means future disputes are more likely to focus on whether the relationship was unfair in the round, rather than on older arguments about fiduciary status or bribery.

There is also a wider backdrop to this. In Vanquis Bank Limited v TMS Legal Limited [2025] EWHC 1599 (KB), the High Court allowed Vanquis’s claim against TMS Legal to continue to trial, in a case centred on allegations that large volumes of complaints had been submitted without proper due diligence. Separately, the FCA wrote to claims management companies on 31 July 2025 asking them to review financial promotions relating to motor finance claims and ensure they complied with the rules and the Consumer Duty.

This doesn’t make the underlying complaints any less serious. But it does mean the next phase of this story is likely to involve both genuine legal scrutiny and continued pressure around how claims are framed, pursued, and challenged.

For complaint teams, the lesson is straightforward. This ruling gives more legal clarity, but not a simple endpoint. Firms still need clear records, careful reasoning, and complaint handling that can stand up to a more fact specific section 140A analysis.

Legal precedents that shaped the Supreme Court’s reasoning

Wood v Commercial First Business Ltd [2021] EWCA Civ 471

• Important because the Supreme Court moved away from the broader fiduciary approach that had influenced earlier thinking in commission cases. It helped mark the limit of when fiduciary duties should arise in credit brokerage relationships.

Hurstanger Ltd v Wilson [2007] 1 WLR 2351

• A key authority on commission disclosure. It remained relevant to the discussion around what a customer is told, how clearly that is presented, and whether disclosure is enough.

FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45

• Useful because it reaffirmed that secret commission recovery depends on the existence of a fiduciary relationship. That mattered here because the Supreme Court rejected the idea that ordinary dealer customer relationships automatically give rise to fiduciary duties.

Bristol & West Building Society v Mothew [1998] Ch 1

• Still one of the leading statements on what fiduciary duty is, and just as importantly, what it is not. It helped explain why the Court was not prepared to stretch fiduciary concepts into a standard arm’s length commercial relationship.

Plevin v Paragon Personal Finance Ltd [2014] UKSC 42

• The most important precedent for section 140A. It established that non disclosure of a very large commission can contribute to an unfair relationship under the Consumer Credit Act 1974. The Supreme Court made clear that Plevin does not transfer directly into motor finance discretionary commission cases, but it still provides essential context for understanding why Johnson mattered.

These cases show the Supreme Court’s overall approach: cautious about expanding fiduciary duties too far, but willing to recognise unfairness under section 140A where the facts justify it.

Further information on the Supreme Court’s decision can be found here.

FAQs about the Supreme Court motor finance ruling

Did the Supreme Court say all motor finance commission was unlawful?

No. The Supreme Court rejected the fiduciary duty and bribery routes advanced in the appeals. But it upheld Johnson under section 140A of the Consumer Credit Act 1974, which means some motor finance complaints can still succeed where the relationship is found to be unfair on the facts.

Why does section 140A matter so much after this ruling?

Section 140A matters so much after the Court judgement because it’s now the clearest legal route for many future motor finance complaints. The Court confirmed that section 140A allows a broad, fact sensitive assessment of whether the lender borrower relationship was unfair.

Why is Johnson v FirstRand Bank trading as MotoNovo Finance so important?

Johnson v FirstRand Bank trading as MotoNovo Finance was the appeal in which the Supreme Court upheld the customer’s claim under section 140A. The Court’s reasoning differed from the Court of Appeal, but it still found unfairness on the facts.

Did the Supreme Court ruling end motor finance complaints?

No, the Supreme Court ruling closed down some arguments, but it didn’t end the wider complaints landscape. It clarified that future disputes are more likely to focus on unfair relationship claims under section 140A. Separately, the FCA has since confirmed a redress scheme, which sits alongside the judgment rather than replacing it.

Is this article about the FCA redress scheme as well?

Only briefly. This article is about the Supreme Court ruling and what it means for section 140A complaints. The FCA’s confirmed motor finance redress scheme is now a separate topic in its own right.