On Friday August 1^st 2025, the UK Supreme Court handed down judgment in the case of Hopcraft v Close Brothers Ltd[2025] UKSC 33 (and conjoined cases). To some surprise, it overturned the Court of Appeal’s decision as to the fiduciary rules, severely curtailing the liability of motor dealers, and more significantly, lenders, in its core situation. This blogpost summarises the decision, its implications both practical and legal, and reflects on the role of the academic lawyer in such proceedings.

The core situation is simple. A consumer wishes to purchase a motor car, and is offered finance by the dealer. It is presented, explicitly or implicitly, as suitable, competitive and usually as a selection from a panel of lenders. The lender pays a commission to the dealer which is often not or not fully disclosed to the buyer.

The concerns fall under two heads. First, perhaps the consumer was not given the most competitive deal and instead the dealer chose the lender paying it the greatest commission. This is the dealer putting its own interests ahead of its client’s. In doing so, the client’s ability to choose the best option is vitiated. Second, perhaps the commission was very high or other terms existed that simply made the credit deal unfair. There is some crossover, for instance in ‘DIC’ (difference in charge) arrangements – already prohibited – where the dealer could secretly bargain up the interest rate and be rewarded with a higher commission accordingly, or in first refusal arrangements, where one lender is preferred over the others.

The Court of Appeal took an extremely wide view of liability, holding that dealers were subject to the fiduciary duty of loyalty in equity and the lenders were liable as accessories in dishonest assistance, also in equity. Moreover, it held the common law tort of bribery also applied against both dealer and lender, the advantage being it does not require dishonesty on the part of the payer of the commission (though it required absolutely no disclosure, so merely disclosing there mightbe a commission meant a claimant had to resort to the equitable fiduciary claims). Thus all three claimants – Mr Johnson, Ms Hopcraft and Mr Wrench – won. The lenders were ordered to pay the value of the commissions to the buyers.

The Supreme Court disagreed. There was no fiduciary duty in this situation. Moreover, the common law claims, previously thought to be available additionally where there was merely a duty to provide disinterested advice, recommendations or information, was held to be available only where there was a fiduciary duty. Therefore both sets of claims were harmonised and disapplied.

Now claimants must have resort to the Consumer Credit Act 1974, ss 140A–140D, allowing the court to intervene if the credit bargain is unfair. Mr Johnson managed to succeed because the commission was 55% of the cost of the credit, very high, and not positively brought to his attention. But this is a highly fact-sensitive enquiry that depends on a ‘very broad range of factors’. The Court gave no hard and fast rules nor a boundary, though such a high commission was said to be ‘a powerful indication’. Another was the false impression given that there was a selection from a panel of lenders where in fact one had first refusal. One other significant factor is surely if the arrangement was a DIC.

In practice, the uncertainty of this and the cost of litigating means most buyers will do better to claim under the redress scheme the FCA is setting up. The Supreme Court noted the existence of the ‘top-down’ regulation of this regulator and the CCA in determining no fiduciary duty was owed. One suspects that the Court had in mind the argument that if fiduciary duties are not required because their function is fulfilled through another route, they will not be raised(unless the relationship is in a traditional category such as trustee and beneficiary). One also suspects the Court had in mind the problem of fielding so many claims clogging up the county courts. With a judicial realist hat on, this is sensible policy, though one does have to read between the lines to infer it. Absent this, it would be possible to escape the usual fiduciary obligations of a credit broker simply by selling the credit with something else and offering more paperwork to sign rather than automatically binding the client to the loan contract, a deeply unattractive prospect.

Furthermore, in broad terms of policy, one should note that motor dealers are not fully permitted to act in their own self-interest, despite some claims in the popular press. It is simply that the bar has been raised and the matter is dealt with under specialist law rather than general fiduciary law. The factors that led Mr Johnson to success amply show this. The dealer cannot skew the information presented to the buyer so much that buyer’s ability to make a considered decision is vitiated. This is the same role fiduciary law plays, though fiduciary law is much stricter. The decision should therefore be seen as a compromise, not outright victory for lenders, a conclusion supported by the facts that there still is going to be a centrally managed redress scheme.

Finally, I was one of the few to have their academic work cited in the judgment. My study showed how the common law claims were spun off the equitable ones. Since the court wished to show neither set applied, this finding supported its argument. In the academy we have more time than busy court and counsel to conduct such in-depth research. To quote Lord Neuberger, a former President of the Supreme Court:

[A]s judges we will often benefit from the perspective brought by academic experts to a particular subject and the rigorous examination which they have subjected it to. That perspective can often provoke ideas, which can be tested in court, but which would not otherwise have come to light in proceedings.