The judgment in Hopcraft et al was delivered right on time at exactly 17:00 on the 1st of August 2025. The justices overturned the decision of the Court of Appeal in all but one respect: rejecting the lower court’s imposition of a fiduciary or disinterested duty on credit intermediaries, but reaffirming the unfairness of one of the transactions (the Johnson transaction) and ordering the refund of commission and associated interest to that consumer.

Initial reaction to the judgment from the industry was overwhelmingly positive - understandably. The reaffirming of a fiduciary or disinterested duty onto all credit intermediaries would have locked open the floodgates for the building tsunami of claims against funders and intermediaries and cost the industry billions of pounds and a lot of effort. Conversely, the CMCs were undoubtedly disappointed to read the justices’ decision. However, two days later the FCA’s subsequent announcement of the details of the compensation scheme related to motor finance has no doubt tempered both the relief of the lenders and the disappointment of the CMCs.

The judgment is a fantastically clear and detailed exploration of the law; in my opinion the press summary does not do a good job of communicating the justices’ work and for that reason I would implore anyone interested to skip straight over the press summary and go for the full judgment.

All the cases addressed in this judgment were purchase transactions governed by the CCA 1974, so what can we learn by reviewing the case from the perspective of the leasing industry?

The Role of the Dealer

There is a lot of complex legal analysis in the judgment, but in my submission the central factor was the role of the dealer when acting as a credit intermediary. 

The justices were presented with two visions of the motor dealer’s role in the tripartite transaction involving the dealer, the consumer and the lender: for the respondents Robert Weir KC submitted that the dealer takes part in two separate transactions; one regarding the sale of the car to the consumer, and then secondly acting as an introducer for the consumer in procuring any necessary finance to support the purchase. The justices preferred an alternative - that the transaction should be considered as a whole and in that context it is unrealistic for the dealer to be acting disinterestedly as they obviously have an interest in the sale of the car.

From the perspective of common sense and legal practicality, I can see why the justices so decided: the dealer’s primary business is the purchase and sale of motor vehicles; the finance is merely an aid to that trade. The principle of the tripartite transaction is well understood and grounded in the history of consumer credit.

The justices therefore found it impossible that the dealer could on the one hand be required to display the selfless position of a fiduciary, while on the other hand having a commercial interest in the completion of the sale.

Therefore, the law is settled for now: a dealer engaged in the sale of items supported by credit does not have a fiduciary or disinterested duty to the consumer.

Scope of Decision

The justices were clear that they recognised that the transactions they were dealing with were purchase transactions and did not make any attempt to broaden their consideration into hire.

They also distinguished between the role of the dealer as described above, and that of a pure finance broker.

They touched on, but did not delve into the sophistication of the consumers and how (if at all) these principles could apply to a purchase undertaken by a business.

Therefore, the position for pure finance brokers remains unclear and thus lessors and leasing brokers would do well to absorb the ruling in detail before deciding what action to take. I submit it unlikely that the court would find in a future hearing that a leasing broker is acting as a fiduciary in relation to their consumer, but without the presence of the broker’s interest in the sale of their asset there may be grounds for distinguishing between the hypothetical future case and Hopcraft.

Mitigations

It feels as though the commission disclosure measures hurriedly introduced after the Court of Appeal’s ruling could now be unwound somewhat - although there may be some reticence in lessors’ legal teams to do that. Hopefully the market will resolve this itself, as generally the measures are cumbersome, do not appear to provide any consumer benefit and in some cases bordered on the bizarre!

I suspect my focus as a leasing broker would be on keeping the necessary records showing that the selected product was not an outlier in terms of the rental paid by the customer and/or the commission paid by the lessor: as the scale of commission paid to the dealer in the Johnson transaction was the primary reason that the justices upheld the Court of Appeal’s finding that the transaction was unfair.

I would certainly be alive to the fact that the business model of a leasing broker is not the same as that of a motor dealer (or other vendor) when making introductions for the purpose of credit. Careful consideration should be given to how leasing brokers weigh up the benefits of each of their lessors before making recommendations.

If I was an asset finance lessor or intermediary, I think I would take some comfort in the justices keeping to the narrow facts of the case and not attempting to expand out into the business-to-business market.

Closing Thoughts

With the advent of more and more digital quoting in the leasing industry, being able to demonstrate the market position that existed years ago is more easily achievable than it ever has been. However, there is still going to be a lot of work required by both lessor and intermediary to ensure that the products being offered to consumers are fit for purpose and fairly priced.

Of course, Hopcraft is not the end of the story… the hire industry is already on notice that the forthcoming review of the CCA will be considering the regulatory perimeter as well as the new mediums through which consumers interact with financial services. The world has changed a lot since 1974 and will continue to do so, and legislation and regulation will have to do its best to keep up.

We at QV Systems will continue to work hard building the tools that enable the industry to react to the changing world in a compliant and efficient way!

Contains Supreme Court information licensed under the Open Supreme Court Licence v1.0.