A recent Supreme Court decision has brought welcome clarity to the legal landscape around motor finance commissions, with implications for dealers, lenders, and consumers alike.

The case centred on whether car dealers act as fiduciaries (whether they have a legal duty of undivided loyalty) when arranging finance for customers. Customers in the case argued that by earning undisclosed commissions from finance companies, dealers breached this duty.

The Supreme Court disagreed. It confirmed that a fiduciary duty only arises when a party has undertaken to act solely in another’s interests, something not normally found in commercial negotiations. While customers may trust a dealer to recommend finance, that trust alone does not create a fiduciary relationship. Dealers, the Court said, are pursuing their own commercial objectives, selling cars — and that’s not compatible with the selflessness required of a fiduciary.

As a result, the Court concluded that dealers arranging finance do not generally owe fiduciary duties to customers, meaning finance companies could not be held liable for “dishonest assistance” in such cases.

Bribery Argument Rejected

The Court also addressed whether the civil law of bribery applied. Bribery in this context requires the existence of a fiduciary duty (since the dealers weren’t fiduciaries, the claim failed). The Court warned that extending bribery rules to anyone influencing a decision without an undertaking to act solely in another’s interests would capture too many everyday commercial scenarios, from shop assistants to online platforms, where commercial incentives are expected.

Unfair Relationship Under the Consumer Credit Act
The third issue related to unfair relationships under section 140A of the Consumer Credit Act 1974. Here, the Supreme Court took a different view. It found the finance agreement between Mr Johnson and lender FirstRand was unfair, given:

• The size of the commission compared to the overall cost of credit

• The fact the commission was not disclosed to the customer

• The hidden commercial link between the dealer and the lender

The Court stressed that unfairness is highly fact-dependent, commissions aren’t automatically unfair, but factors such as size, nature, disclosure, customer characteristics, and compliance with regulations all play a role.

What This Means for the Industry

This judgment draws a sharper line between acceptable commercial practice and breaches of consumer protection law. While it shields dealers from certain fiduciary-based claims, it also reinforces that lenders and dealers must be transparent about commissions where lack of disclosure risks making the relationship unfair.
At Product Partnerships, we work with motor dealers, finance providers and intermediaries to ensure their practices align with both regulatory requirements and the evolving case law. This ruling is a reminder that compliance isn’t just about ticking boxes, it’s about understanding where transparency and fairness can make all the difference.