Supreme Court judgment: industry reacts in AFC webcast

In response to Friday evening’s landmark Supreme Court judgment on commission disclosure in motor finance, Asset Finance Connect (AFC), in partnership with Shoosmiths and sponsored by Odessa, convened a special webcast on Monday morning to deliver the first independent and in-depth industry reaction.

This urgent 90-minute session, held just days after the 16:35 Friday ruling, brought together leading legal and industry experts to dissect the implications of the Court’s findings for the motor finance sector and wider financial services landscape.

For those who missed the live webcast, it is now available to watch on-demand here.

A detailed webcast review and expert analysis will be published shortly on the Asset Finance Connect website.

Webcast highlights: Key takeaways from industry experts

The session, moderated by David Betteley (Head of Auto Finance, AFC), featured an authoritative panel including Wayne Gibbard, partner at Shoosmiths and legal adviser to AFC; John Phillipou, chair of the Finance & Leasing Association (FLA) and managing director of SME lending at Paragon Bank; and Ian Plummer, commercial director at Autotrader.

Together, they explored the legal, regulatory, and commercial ramifications of the Supreme Court’s decision.

Key topics discussed included:

Immediate reactions: Insight into how regulators, government departments, and trade bodies spent the weekend responding to the ruling and preparing for the fallout.
Legal clarity: Wayne Gibbard provided a detailed analysis of the Supreme Court’s rationale, particularly on why dealers do not owe fiduciary duties to consumers, and implications of an “unfair relationship” on the industry.
Economic impact: The panel examined how the judgment could shift lender-broker-consumer dynamics, potentially reshape compliance protocols, and raise the spectre of future regulatory intervention.
What comes next: Discussion centred around the FCA’s proposed compensation scheme announced on Sunday, and practical steps that lenders and intermediaries must begin preparing for.

What the Supreme Court decided

The Court’s ruling largely favoured motor finance companies, overturning the earlier Court of Appeal finding that dealers owed fiduciary duties to customers. Lord Reed made clear that such a duty did not exist in commercial car finance transactions, stating: “The dealer is not the agent of the customer… each party to the three-cornered arrangement is at arms’ length.”

However, the Court upheld one key claim – Johnson v. MotoNovo – based on an “unfair relationship” under the Consumer Credit Act 1974. In that case, the dealer received 55% of the total charge for credit as commission, and the Court ruled that the lack of transparency created a misleading impression for the consumer. The judgment in this case entitles the claimant to repayment of the commission, plus commercial interest.

Why this matters

This ruling could reshape the future of commission-based motor finance in the UK. While lenders may feel reassured by the rejection of fiduciary duty arguments, the upheld “unfair relationship” finding opens the door to further claims.

On Sunday, the FCA announced plans to implement a redress scheme for consumers affected by discretionary commission arrangements in motor finance. For many in the industry, this scheme poses more questions than answers.

What’s next

Stay tuned to Asset Finance Connect for the upcoming full webcast review and in-depth expert commentary on what this judgment means for your business.

Watch the on-demand webcast now at
https://event.on24.com/wcc/r/5036208/FC99C55940F7BFB9A68CA179D4895411