The Supreme Court's decision in Hopcraft v Close Brothers [2025] UKSC 33 represents the most significant development in consumer finance litigation since the PPI mis-selling scandal. For law firms, claims management companies and expert witnesses working in motor finance commission claims, understanding the full implications of this judgment is essential.
The Core Ruling
The Supreme Court held that commission arrangements in motor finance agreements could give rise to an unfair relationship between the lender and the borrower under section 140A of the Consumer Credit Act 1974. The court rejected the fiduciary duty analysis and confirmed that the unfair relationship route is the appropriate basis for claims. Critically, the unfair relationship test is not universal — it applies where the commission paid to the broker or dealer exceeded 35% of the total credit charges to the borrower over the term of the agreement. This applies equally to both fixed and discretionary commission arrangements. Where that threshold is met, the borrower is entitled to seek redress; where it is not, no unfair relationship arises.
Implications for Existing Claims
The judgment fundamentally changes the approach to eligibility assessment for motor finance commission claims. Prior to Hopcraft, many practitioners were calculating redress on the basis of the difference between what was paid and what a hypothetical fair commission would have been. Following Hopcraft, the correct starting point is to establish whether the 35% threshold is met before any redress calculation is undertaken.
This has significant implications for the expert witness reports we are producing at Rivermead. Any report that calculated redress without first establishing eligibility against the 35% threshold will need to be reviewed and potentially revised. Law firms instructing us should consider whether existing reports in ongoing cases require updating.
The Fixed Commission Question
The judgment confirms that the unfair relationship test under section 140A applies equally to fixed and discretionary commission arrangements. The relevant question in both cases is whether the commission exceeded 35% of the total credit charges over the term — not the nature of the arrangement itself. This provides clarity for practitioners dealing with the full range of motor finance commission structures.
What Law Firms Should Do Now
- Review all existing motor finance expert reports to confirm eligibility has been assessed against the 35% threshold
- Consider whether supplementary reports are required in cases where this assessment has not been undertaken
- Obtain DSAR data from lenders and finance houses in anticipation of increased claim volumes
- Instruct expert witnesses early given the volume of cases now expected to proceed
Rivermead's Approach
The Rivermead Partnership has been working on motor finance commission claims since the early FCA investigation. We have updated our eligibility assessment and quantum methodology to reflect the Hopcraft ruling and can provide expert reports on both the liability and quantum aspects of motor finance claims. We work with law firms acting for both claimants and defendants.
If you have existing motor finance cases that need reviewing in light of Hopcraft, or new instructions to consider, please request a call back and we will be happy to discuss.