Divided loyalties: the Supreme Court on motor finance commission disclosures

In a hotly-anticipated decision overturning the Court of Appeal, the Supreme Court has found that car dealers, acting as credit brokers for motor finance, do not owe fiduciary duties to borrowers, and therefore that the relevant claims failed against lenders for bribery and dishonest assistance in relation to commissions paid by lenders to car dealers.

Yet the Supreme Court also confirmed the relevance of unfair relationship provisions in the Consumer Credit Act 1974 on a highly fact-sensitive basis on which it gave some limited guidance.

The FCA has moved quickly to confirm that it will consult - likely from early October - on a potential redress scheme, with payments expected to commence in 2026.

The financial services industry has widely welcomed the Supreme Court’s decision on fiduciary duties. That said, lenders must carefully consider the Supreme Court’s decision on unfair relationships, both for their back books and their current approaches to disclosures.

Here is our detailed note with commentary and insights on this important development and its implications.  Get in touch with us or your usual Linklaters contacts to discuss how these will impact you.