Day of reckoning for motor finance claims

The Supreme Court will hand down its eagerly awaited judgment over finance options arranged by car dealers at the unusual time of 4.35pm on Friday 1 August.

The three linked appeals centre on cars bought on credit where only one offer of finance was presented to, and accepted by, the buyer. In each case, the dealer received a commission from the lender.

In Hopcraft and another v Close Brothers Limited, the commission was kept secret while in Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance and Wrench v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance, the claimants were unaware a commission would be paid but the lender’s standard terms and conditions referred to a commission of an unspecified amount being paid.

The Court of Appeal found in favour of all three claimants, ruling that commissions paid to the car dealerships for arranging loans without giving the customer sufficient information about the commission and obtaining their informed consent had been unlawful. The lenders appealed to the Supreme Court.

The principal issue the Supreme Court will decide is if a car dealer, who receives a commission from a lender, owes a duty to the buyer to enable the buyer to bring a claim against the lender for bribery or dishonest assistance under the Consumer Credit Act 1974.

The Financial Conduct Authority and the National Franchised Dealers Association were interveners in all three cases. In March 2025, the FCA said that if, following the outcome of the Supreme Court judgment, the FCA concludes motor finance consumers have ‘lost out’ it would likely consult on an industry-wide redress scheme.

In June this year, the FCA said it would confirm within six weeks of the Supreme Court judgment if it was to pursue a redress scheme and would announce any proposed changes to its handbook rules ‘soon after’ the judgment.

The decision is also being watched by the government. The Guardian reported last week that chancellor Rachel Reeves is considering legislation to overrule the judgment. Reeves tried unsuccessfully to intervene in the case earlier this year in order to see a ‘fair and proportionate judgment’.

The rules around payments such as those in Hopcraft, Johnson and Wrench are covered by common law, but government intervention and new primary legislation could change that. At the time a Treasury spokesperson said: ‘We respect the court’s decision to not grant our application to intervene in the Hopcraft case and will monitor it closely.’

The Supreme Court's three-day hearing before Lord Reed, Lord Hodge, Lord Lloyd-Jones, Lord Briggs and Lord Hamblen was held in April this year and the judgment is to be handed down the day after the end of the Trinity term at 4.35pm.

Supreme Court judgments are normally handed down at 9.45am. The Supreme Court declined to comment on the timing but said no inference should be drawn as to the outcome of the appeals.