Hopcraft v Close Brothers Ltd; Johnson v FirstRand Bank Ltd; Wrench v FirstRand Bank Ltd [2025] UKSC 33 (01 August 2025)

Three customers claimed that commissions paid by finance lenders to motor dealers for arranging hire purchase agreements constituted bribes or breaches of fiduciary duty. The Supreme Court held that dealers in typical tripartite car finance transactions do not owe fiduciary duties to customers, dismissing the bribery and equity claims, but upheld one customer's claim under section 140A of the Consumer Credit Act for an unfair relationship due to undisclosed commission.

Facts

Three customers obtained used cars through hire purchase arrangements with finance lenders, facilitated by motor dealers acting as credit brokers. In each case, the lender paid commission to the dealer, which was either undisclosed or only partially disclosed to the customers. The customers claimed the commissions were bribes or secret profits received by dealers in breach of fiduciary duty, seeking remedies against the lenders. Mr Johnson additionally claimed his relationship with the lender was unfair under section 140A of the Consumer Credit Act 1974 (CCA).

The Tripartite Transaction Structure

The typical transaction involved: (1) the customer selecting a car from a dealer; (2) the dealer obtaining finance offers from lenders on its panel; (3) the customer entering into a hire purchase agreement directly with the lender; and (4) the lender paying commission to the dealer for introducing the business.

Issues

The central issues were: (1) whether motor dealers in such transactions owe fiduciary duties or ‘disinterested duties’ to customers sufficient to engage the tort of bribery or equitable remedies; (2) whether the tort of bribery should be abolished; (3) what level of disclosure negates secrecy for bribery purposes; and (4) whether Mr Johnson’s relationship with FirstRand was unfair under the CCA.

Judgment

The Tort of Bribery

The Supreme Court rejected submissions that the tort of bribery should be abolished, holding it is too well established to be questioned. The Court confirmed that liability for bribery requires the recipient to owe a fiduciary duty of loyalty to the claimant. A lesser ‘disinterested duty’ is insufficient. The Court overruled the Court of Appeal’s approach in Wood v Commercial First Business Ltd to the extent it suggested otherwise.

Fiduciary Duties

The Court held that fiduciary duties arise where a person undertakes to act in the interests of another to the exclusion of their own interests. Car dealers acting as credit brokers in typical tripartite transactions remain arm’s length sellers throughout the negotiation and do not undertake such duties. The dealers’ continuing commercial interest as sellers is incompatible with recognition of a fiduciary obligation to customers.

Disclosure Requirements

The Court held that the same standard of disclosure applies at common law and in equity: full disclosure of all material facts is required to avoid liability, not merely disclosure that commission ‘may’ be paid. The Court departed from the reasoning in Hurstanger Ltd v Wilson on this point.

Section 140A CCA

The Court upheld Mr Johnson’s claim under section 140A. The relationship was unfair due to: the large undisclosed commission (25% of credit advanced); the undisclosed commercial tie requiring the dealer to offer all business to FirstRand first; and the misleading Suitability Document which created a false impression of independent advice from multiple lenders.

Implications

This judgment clarifies that typical motor finance transactions do not impose fiduciary duties on dealers towards customers, protecting the industry from widespread bribery claims based solely on undisclosed commissions. However, the CCA provides consumer protection where relationships are unfair, particularly where commissions are disproportionate or dealers’ true commercial arrangements are concealed. The decision confirms the continuing importance of the tort of bribery while establishing its proper boundaries, requiring breach of fiduciary duty rather than any lesser obligation.

Verdict: The Supreme Court allowed the lenders’ appeals in the Hopcraft and Wrench cases and in Mr Johnson’s case insofar as it was based on bribery or equity. However, Mr Johnson’s appeal under section 140A of the Consumer Credit Act 1974 was upheld, with FirstRand ordered to pay him the commission of £1,650.95 plus interest from the date of the agreement.

Source: Hopcraft v Close Brothers Ltd; Johnson v FirstRand Bank Ltd; Wrench v FirstRand Bank Ltd [2025] UKSC 33 (01 August 2025)