Close Brothers Group and FirstRand Ltd have announced plans to appeal to the UK Supreme Court after the Court of Appeal ruled against them in a landmark decision on motor finance commission disclosures.

The ruling that was delivered on Friday, 25th October 2024, upheld complaints from three consumers who argued that they were mis-sold motor finance.

Overturning earlier judgments in lower courts, this is the first case to be heard from: Johnson v Firstrand Bank Ltd, Wrench v Firstrand Bank Ltd and Hopcraft v Close Brothers Ltd.

The initial case, known as the “Hopcraft” case, centres on the requirement for brokers to obtain fully informed consent from customers before receiving a commission from lenders.

The Court of Appeal determined that this did not happen in any of the three cases involved. The decision set a new legal standard for the duty brokers owe to customers, establishing a fiduciary responsibility that includes a duty of loyalty and disinterestedness.

The new duty requires brokers to provide greater transparency and seek customer consent on commissions. This standard surpasses existing rules from the Financial Conduct Authority but is arguably more aligned to the principles of the Consumer Duty.

Although the latest decision may be subject to appeal, it is already being referred to as PPI2. This means that the ruling could have huge implications for the motor industry and also broader risk implications for activities of similar nature, such as mortgage intermediaries.

TCC has been advising a number of firms affected by the new duty. TCC experts are also working in conjunction with leading UK law firms to understand the immediate and long-term implications for firms.

Do you need an impartial view of the impact this case could have on your firm?

We at TCC have the expertise and experience to help. Our experts are available for a no-obligation discussion of potential risks your firm should know about and provide independent advice on the next steps.