Who Were the Parties in Johnson v FirstRand?
Mr Wrench & Mr Hopcraft
(MotoNovo Finance)
The case was heard alongside related appeals concerning Wrench v FirstRand and Hopcraft v Close Brothers, creating a combined judgment that addressed common legal questions arising from multiple PCP and HP mis-selling claims.
What Was the Central Legal Question?
The case raised a fundamental question about the legal duties owed by car finance lenders when they pay commissions to car dealers:
- Do car dealers owe a fiduciary duty to consumers when arranging car finance?
- Is a lender liable when it pays a dealer an undisclosed commission that creates a conflict of interest?
- Can consumers reclaim the interest overcharge that resulted from a discretionary commission arrangement?
What Did the Supreme Court Rule?
Key findings:
Car dealers act as credit brokers and owe consumers a duty to act in their best interests. The payment of discretionary commissions to dealers by lenders — without disclosure to the consumer — was a breach of this duty. Lenders who facilitated and benefited from this arrangement share liability with the dealer.
Minority view:
The dissenting justice argued that the fiduciary duty analysis was too broad, and that the established duty should be limited to situations where consumers placed specific trust in the dealer as their financial advisor — which is not always the case in an arm's-length commercial transaction.
The Four Key Legal Principles Established
What Remedies Did the Court Say Consumers Are Entitled To?
The Supreme Court confirmed that consumers who were subject to undisclosed DCA arrangements are entitled to seek:
- Rescission of the commission — the ability to claim back the inflated interest paid as a result of the commission arrangement
- Account of profits — requiring the lender to disgorge (pay back) the commission it received from the dealer
- Compensation for loss — compensation for any additional financial harm caused by the undisclosed conflict of interest
Why Did This Case Take So Long to Reach the Supreme Court?
The legal journey in this case illustrates why individual consumers have struggled to bring DCA claims without specialist legal support:
- County Court (2022–2023): Individual consumers brought claims in local courts. The legal complexity meant conflicting decisions across different courts.
- Court of Appeal (2023): A test case was fast-tracked to the Court of Appeal to resolve the conflicting rulings. The Court of Appeal ruled in favour of consumers.
- Supreme Court (2024): Lenders appealed to the Supreme Court, seeking to overturn the ruling. The Supreme Court rejected their appeal, confirming the consumer-friendly outcome.
The fact that lenders fought this all the way to the Supreme Court — and lost — underscores both the strength of consumers' legal position and the enormous financial stakes involved.
Does the Ruling Apply to Black Horse, Santander and Other Lenders?
The ruling directly concerned MotoNovo Finance (FirstRand) and Close Brothers. However, the legal principles established apply generally to all lenders who used Discretionary Commission Arrangements — which, as the FCA's investigation found, means virtually all major UK motor finance providers.
The following lenders are all subject to FCA review proceedings that rely on the same legal principles:
- Black Horse Finance (Lloyds Banking Group) — £1.95bn provisioned
- Close Brothers — Named defendant in Supreme Court case
- Santander UK — Under FCA review
- MotoNovo Finance — Named defendant in Supreme Court case
- Barclays Partner Finance — Under FCA review
What Does the Ruling Mean for the FCA Redress Scheme?
The Supreme Court ruling and the FCA investigation are two parallel processes that reinforce each other:
The Supreme Court ruling established that consumers have a valid legal basis for their claims — courts will uphold them if they go to litigation. This removes the main legal uncertainty that could have allowed lenders to resist paying.
The FCA's redress scheme, expected to launch mid-2026, creates a streamlined administrative process so that millions of consumers can receive compensation without each having to bring an individual court action.
What Should I Do Following the Johnson v FirstRand Ruling?
The ruling strengthens every potential PCP or HP claimant's position considerably. Here is what we recommend:
- Check your eligibility now — Use our free checker. It takes 60 seconds and immediately tells you whether your agreement is likely covered.
- Don't wait for the scheme to open — Registering your claim before the FCA scheme officially opens ensures you are in the queue from day one.
- Consider multiple agreements — If you have had more than one car on finance since 2007, each agreement may be a separate claim.
- Act before 29 July 2026 — This is the deadline for the streamlined redress scheme. After this date, pursuing a claim becomes significantly harder.