Undisclosed commissions – what the Supreme Court decision will mean

On Friday 1st August 2025, the UK Supreme Court is expected to hand down judgment in three consolidated cases on undisclosed commissions. The cases themselves relate to commissions paid to dealers by lenders who provided car finance, but the implications of the judgment go far wider than that.

The three cases involve differing levels of disclosure of commissions, from no mention at all to the customer, through wording included in terms and conditions, to fuller disclosures that still omitted how the commission was calculated and the fact that the dealer was contractually bound to favour a certain lender.

The Court of Appeal held that, in all three situations, the dealers owed a “disinterested duty” to car buyers to provide information, advice or recommendations to them on an impartial basis. The Court went further, holding that the relationship regarding the financing of the purchase was a fiduciary one, under which the car buyer placed trust and confidence in the dealer to arrange the most suitable finance.

Wider impact

There are numerous combinations of findings open to the Supreme Court. The wider the Court construes the duties upon those acting as intermediaries, the further the potential ripples will reach. Businesses which could feel the impact include not just financial institutions, but asset managers and insurers.

The response

The FCA announced in March that, in the event that the Court concluded that lenders were liable to refund commissions, it would consult on an industry-wide consumer redress scheme, to avoid the need for individual claimants to go through a court process or instruct solicitors. The FCA has set out the principles by which any redress scheme would be designed and has been consulting on this.

Meanwhile reports suggest that the Chancellor, Rachel Reeves, is considering a government response to the judgment, in the event that it upholds the Court of Appeal wholly or in part. The government is concerned that a potentially huge number of claims could ripple out across various sectors. Controversially, it has been discussed whether retrospective legislation could set new boundaries for disclosures of commissions and head off potential claims relating to historic loans and sales.

Webinar

On Monday 4 August at 1:00pm, a panel of Simmons experts will discuss the implications of the Supreme Court decision, focussing on business sectors affected and likely developments over the next year and beyond.