Latest Information Regarding Financial Responsibility of Automobile Dealerships in Loan Transactions
Motor Dealers in the UK Free from Fiduciary Duty in Car Finance Deals
Following a landmark ruling by the UK Supreme Court in August 2025, motor dealers in the UK are no longer considered to owe a fiduciary duty to customers in relation to hire purchase car finance deals. This means that motor dealers can pursue their own commercial interests while arranging finance, without an obligation of single-minded loyalty to the customer.
The judgment, known as Hopcraft v Close Brothers and related cases, reaffirmed that fiduciary relationships require a duty of loyalty and acting exclusively for the principal’s (customer's) benefit to the exclusion of the fiduciary’s own interests. However, the Court found that motor dealers, who act as vendors with their own interests, do not fall under this category.
Consequently, there can be no liability for dishonest assistance or bribery related to commissions paid to dealers. The Court overturned prior authority suggesting otherwise. It's worth noting that if bribery liability had existed, strict rules would have applied, requiring lenders to pay the commission amount to customers without needing to prove loss, unless fully informed consent was given.
However, the judgment did find that in at least one case, the finance contract was unfair under the Consumer Credit Act (CCA) due to undisclosed high commissions and misleading representations about choice of lenders. The Financial Conduct Authority (FCA) is moving forward with plans to implement a consumer redress scheme to compensate customers harmed by undisclosed or unfair commissions, potentially reducing the need for litigation or claims management companies.
In summary, the Supreme Court's position is that motor dealers act commercially in hire purchase transactions without fiduciary obligations, limiting claims for bribery or fiduciary breach but preserving consumer protections under financial services law and the CCA.
John Cayton, a Senior Partner at Caytons Law LLP, a company under Gallagher Bassett, played a significant role in this case. Gallagher Bassett, a leading provider of claims and legal solutions in the UK, recently acquired Caytons. The acquisition bolsters Gallagher Bassett’s robust portfolio in the UK, expanding the company’s existing recovery and litigation services.
The impact of Caytons' approach was evident in the findings of the case, which were consistent with the submissions presented by Jonathan Kirk KC on behalf of the National Franchised Dealers Association (NFDA). This judgment is welcome news for many motor dealerships, particularly family-run ones that play a key role in local economies.
- Supreme Court Judgment - Hopcraft v Close Brothers
- Caytons Law LLP Press Release
- NFDA Press Release
- Gallagher Bassett Acquisition Announcement
- FCA Announcement - Consumer Redress Scheme
[1]: Supreme Court Judgment - Hopcraft v Close Brothers [2]: Caytons Law LLP Press Release [3]: NFDA Press Release [4]: Gallagher Bassett Acquisition Announcement [5]: FCA Announcement - Consumer Redress Scheme
In light of the Supreme Court Judgment - Hopcraft v Close Brothers, it seems that motor dealers in the UK are now free to pursue their own financial interests in car finance deals without being bound by a fiduciary duty. This could potentially impact the future events in the business world regarding car finance, as motor dealers can focus more on their commercial interests. On the other hand, the Financial Conduct Authority (FCA) has announced plans for a consumer redress scheme to compensate affected customers, indicating that the focus on fair business practices and consumer protection under financial services law remains a priority.
