Car Finance: Undisclosed Commissions and Unfair Relationships (Hopcraft v Close Brothers)
The UK Supreme Court delivered a major judgment that clarified the law on undisclosed commissions in motor finance, which has significant implications for the finance industry and millions of consumers. Issue: Does a car dealer who receives a commission from a lender for arranging finance in a tripartite transaction between customer, dealer, and lender in which a car is bought on credit owe a duty to the buyer of the car such as to enable that buyer (absent the requisite level of disclosure) to bring a claim against the lender for bribery or dishonest assistance, or under the Consumer Credit Act 1974 (the “CCA”)? Fiduciary Duty: The court ruled that, in a typical three-cornered motor finance transaction (dealer, lender, and customer), car dealers do not owe a fiduciary duty of loyalty to their customers. This overturned the Court of Appeal's finding that the commission payments constituted a form of "half-secret commission" and were a breach of fiduciary duty or a b...