Supreme Court ruling on finance commissions - Dealer Checklist & FAQs answered
Overview of the Supreme Court ruling
On Friday, August 1st, the Supreme Court delivered its long-awaited decision on three central issues in dealer-arranged motor finance: whether commissions were bribes, whether dealers owed fiduciary duties to customers, and whether the Consumer Credit Act was breached through unfair relationships.
The Court ruled that dealers arranging finance do not owe a fiduciary duty to customers. Dealers remain commercial sellers in a transaction, with no implied loyalty obligation to their customers. As a result, bribery claims tied to fiduciary duties also failed - a significant relief for the motor retail sector.
However, the Court upheld one part of Mr. Johnson’s claim under the Consumer Credit Act, finding an unfair relationship due to a high, undisclosed commission (£1,650.95, 26% of the credit advanced and 55% of the total credit charges) and a concealed commercial tie to a single lender. The lack of clear, prominent disclosure breached FCA rules, particularly where commission levels could influence impartiality.
The FCA intend to launch their consultation on the redress scheme in early October, with a view to starting to pay compensation in early 2026.
Dealer Compliance Checklist
Auxillias have provided us with a Dealer Checklist to ensure retailers comply with the new expectations.
Dealer self-check: Are you compliant?
Ask yourself:
Do we clearly disclose all commissions in our sales process?
Are Suitability Documents and other forms accurate and tailored?
Have staff been trained on FCA CONC and the implications of this ruling?
Do we review and update lender panels or exclusivity arrangements?
Are we capturing and evidencing what was explained to the customer?
Have we stress-tested our approach to ensure it is clear, fair, and not misleading?
If you’re unsure or ticking “no” to any of these, it’s time to take action.
What not to do:
Don’t assume using pre-existing paperwork is safe – several documents cited in the Supreme Court case were found to be objectively misleading, even if no one read them.
Don’t rely on customers to “ask for commission details” – prominence and clarity matter most.
Don’t assume your processes are fine because “you’ve had no complaints yet” – that’s no defence to an unfair relationship claim.
Post-ruling FAQs
We recently hosted a webinar to discuss what the Supreme Court’s ruling means for retailers. During the webinar, we received many questions from our audience, and we’re including he most frequently asked questions in this blog under the following themes:
Redress scheme
Q: How do you imagine a redress scheme will be assessed?
A: The FCA is set to launch a formal consultation by early October 2025 on an industry-wide redress scheme. The redress scheme is likely to be assessed using a fact-specific approach under Section 140A CCA, with factors such as commission size, disclosure clarity, and broker-lender ties being central.
Q: What will be the costs to the dealer? Do you think the lenders will look to dealers to pay back commissions paid for cases that are part of the redress scheme?
A: The FCA’s proposed motor finance redress scheme would see lenders, not dealers, bear the cost of compensating consumers; however, some lenders may seek to reclaim commissions if agreements/indemnities allow, but this will vary.
Q: Will the redress scheme cover non-DCAs as well?
A: Yes, based on current FCA signals, non-DCA cases may also be included.
Q: If the redress scheme is still in the consultation phase, where has the £950 figure come from?
A: That £950 figure cited in discussions about the FCA’s proposed redress scheme originates from the FCA’s own estimates, based on their analysis of likely harm. They currently project that most consumers will probably receive less than £950 in compensation per finance agreement. Official calculations of how they came to this number are yet to be publicly shared.
Q: Would any redress for high commissions be based on the amount of commission paid or the higher level of interest charged to customers to pay such commissions?
A: Redress could be based on the financial harm caused, which may be linked to commission size, interest rate, total charges for credit impact, or a combination of these.
Q: What will happen if it's a s140-based scheme that only applies to lenders? What will happen to complaints sitting with dealers?
A: If the scheme is s140-based and applies only to lenders, complaints with dealers would likely be redirected to the relevant lender to handle under the redress process; however, dealers should still respond to SARs and provide available information. The FCA have set out that dealers will be required to co-operate with the sharing of information/data.
How to sell finance now
Q: What are the different implications for unregulated, as well as regulated financing?
A: Unregulated agreements are not subject to the same FCA rules, but reputational and contractual obligations still apply. For regulated financing, the FCA’s redress scheme could mandate compensation under consumer credit law, whereas unregulated financing would generally fall outside its scope, leaving disputes to be resolved through civil action or voluntary settlement.
Q: Will unregulated finance deals be required to obtain a signature from the customer acknowledging the commission associated with the finance agreement they are taking?
A: Currently, there’s no FCA rule requiring unregulated finance deals to obtain a customer’s signed acknowledgement of commission; however, it is advisable to carry on and disclose the nature and existence, as well as the quantum, whether it is B2C or B2B. There are differing procedures for this, but seeking implicit consent from the customer before the deal is made is the process that carries less risk.
In summary, there is currently no mandatory requirement for unregulated deals to obtain a signed commission acknowledgment, but it is good practice.
Q: Is the commission disclosure still required for other standalone products dealers sell, such as insurance?
A: Yes - for standalone products like insurance, dealers must still disclose any commissions where the sale falls under FCA-regulated activity and the commission could affect the customer’s decision, in line with the FCA’s Insurance Conduct of Business (ICOBS) rules.
Q: As with a lot of dealers, if you have a 1st, 2nd, and 3rd string finance company on your books, but the best PCP deal for the customer is the 3rd choice company, should we place the business there or with our 1st choice company?
A: A retailer has many obligations to ensure a compliant sale. One of these is acting in the best interest of the customer. See Principles 1&6 of the FCA Principles of Business, see Conc 2.5.8R that sets out what amounts to unfair business practices for brokers. Within this rule, it sets out that brokers must not prioritise their own gain over the customers’ needs and/or give preference to lender’s products for personal gain rather than customer benefit. There are many other provisions in CONC and other customer protection laws and regulations designed for customer protection, but this is an example of a few.
You should act in the customer’s best interest, which may mean recommending the third-choice lender if it offers the most suitable deal.
Q: If a broker has DCA complaints currently on hold, should they now forward these on to the lenders to deal with or hold fire until the redress scheme is better understood?
A: If they fall within the current pause that has been announced by the FCA, it might be best to hold on to them for now. You do need to make sure that you follow the DISP rules on allocation of complaints to ensure that the complaint is with the right party, so this must be checked. If the complaints fall within the scope of the FCA’s current “pause” direction, they should remain on hold until the FCA clarifies the redress scheme and any changes to the pause. However, you must still follow DISP 1.7 rules on identifying the “respondent” i.e. the party responsible for investigating and resolving the complaint. If, after reviewing the case, it is clear that the lender is the correct respondent, the complaint should be promptly referred to them (and the customer informed), rather than retained incorrectly.
Keep a record of all decisions, dates, and correspondence so you can evidence compliance with DISP and the FCA’s pause requirements.
Q: Where a franchised dealer uses the manufacturer’s finance arm, does this negate or minimise the risk around an unfair relationship?
A: Using a manufacturer’s finance arm does not in itself negate or minimise the risk of an “unfair relationship,” as the same FCA rules and disclosure obligations apply.
Q: As a dealer, when we have an SAR, we look to pass on the Lender details if we have them - so we do not pause as we give the consumer the information we have and log this as a Subject access request SAR - not our complaint?
A: Correct. A Subject Access Request is made under UK GDPR and the Data Protection Act 2018, not under the FCA’s complaints rules, so the FCA’s current “pause” does not apply. If you hold the customer’s personal data, you must respond within the statutory timescales, and you can also provide the lender’s details were known, so the customer can make a direct request to them. The SAR should be logged and handled under your data protection processes, not on your FCA complaints log.
If a customer combines an SAR and a complaint in the same correspondence, the SAR must still be processed within the required timeframe, while the complaint element should follow the pause requirements.
Q: When a dealer uses a broker with a panel of lenders, how do they know if that broker has a business relationship or preferred relationship with an individual lender? How do they disclose this to their customer?
A: The CONC rule here is to make sure that the broker is making clear and prominent disclosures about their status, power, and ties to lenders. See CONC 3.7 and CONC 4.5.3R. Brokers should disclose any preferential relationships to dealers so they can inform customers accurately.
Q: Would increasing the panel of lenders require dealers to send an application for all customers to every lender on their panel? How can the dealer imply that they are giving the best deal that they have access to if they don't do that?
A: Retailers should be transparent about how they select lenders and ensure this aligns with treating customers fairly. Increasing the panel doesn’t require sending every application to all lenders, but to imply you’re offering the “best deal you have access to,” you’d need a documented, consistent process for comparing key lenders’ rates and terms for that customer, and be transparent about the fact that you haven’t necessarily checked every option.
FCA rules
Q: The FCA state on their customer-facing webpage: "We've found that many firms broke our rules," but haven't published exactly what rules have been broken or the result of their s166 skilled person review, etc. Do we expect to see this published?
A: The FCA introduced the CONC rules that set out how brokers should conduct business when they came into power in 2014. It’s likely the FCA will publish more detail on the specific rule breaches and s166 findings alongside, or as part of, the formal October 2025 redress scheme consultation.
Q: If the FCA introduce a cap on charges, let’s say 50%, this will create a term bias - longer term finance agreements will pay more commission than short term agreements. Is this fair and not classed as discretionary?
A: Currently, we do not know what the FCA redress model will be as yet, and whether harm might be potentially caused to the customer in relation to the size of the commission will be based on the interest rate, the total charges for credit, or both and/or other charges/costs. We encourage our partners to get involved in the consultation process and air any concerns, thoughts, and comments so that all viewpoints can be considered by the FCA.
Wider implications of the ruling
Q: Does the Supreme Court Ruling apply to funders and brokers in the leasing and rental sector?
A: Where transactions within the leasing and rental sector are structured similarly to those within the motor finance market (i.e. tripartite transactions, where the provision of finance is an ancillary service for the broker and the broker does not undertake to put aside its own interests), it is likely that funders/brokers are not in a fiduciary relationship and no fiduciary duty is owed to the customer.
Q: What are the wider implications for other non-motor sectors?
A: The FCA’s motor finance redress approach could set a precedent for other regulated credit sectors, but at this stage, we do not know exactly which sectors could be impacted and how.