By Matthew Pascall, Legal Director – Head of Commercial
Estimate read time 5 minutes 16 seconds
Following the Supreme Court’s long-awaited decision in the motor finance commission case, claimant firms and litigation funders have been assessing its impact on the viability of high-volume claims and any corresponding need for After-the-Event (ATE) insurance.
The UKSC ruled that no fiduciary duty is owed by a car dealer to a car purchaser when offering car finance on behalf of a lender. The Court also provided detailed guidance on the approach to take when considering if credit broking arrangements between lenders, dealers and car purchasers are unfair under the Consumer Credit Act 1974. While seen as a partial reprieve for lenders and dealers, the decision still leaves room for targeted litigation where the facts are strong.
From an insurance perspective, this marks a shift away from speculative bulk claims towards carefully risk-assessed cases with clearly defined prospects.
Supreme Court judgment – narrowed but not closed
In Hopcraft and others v Close Brothers and others [2025] UKSC 33, the Court found that car dealers arranging finance for purchasers did not generally owe fiduciary duties to their customers.
The Court clarified that fiduciary obligations arise only in narrow circumstances where one party has agreed to act with single-minded loyalty to another and puts to one side its own commercial interests – in the Court’s view, an unrealistic scenario in typical dealer finance arrangements.
However, the Court left open the possibility of claims based on unfair relationships. In one successful example, the combination of a large commission, a misleading claim that finance would be sourced from a panel of 22 lenders (when in fact there was an exclusive tie), and the high cost of credit all contributed to a finding of unfairness. The decision emphasised the need for a fact-specific approach.
This repositions the focus of future litigation. It is unlikely to support mass, template-based claims, but does not prevent carefully selected cases from progressing where:
- The commission was high relative to the total amount payable
- The dealer’s arrangement with the lender misrepresented choice or independence
- The terms of the finance agreement were significantly detrimental to the consumer
The FCA’s proposed redress scheme
Shortly after the decision, the Financial Conduct Authority (FCA) announced its intention to consult on a redress scheme for discretionary commission arrangements (DCAs) in motor finance contracts from 2007 to 2021. Redress may be available where consumers were misled about how dealers were incentivised to recommend a particular lender.
The scope of the proposed scheme is expected to be relatively limited. Although the total cost to the industry has been estimated at £9–18 billion, individual payouts may be modest – typically under £1,000. This may still leave scope for individual or small group claims outside the scheme, particularly where the financial loss is more substantial or where the facts suggest deliberate concealment.
The FCA and SRA have also issued warnings about conduct risks in this area. This follows a thematic review which identified widespread failings in areas such as misleading marketing, unclear client fees, poor supervision and inadequate screening of claims. These include:
- Misleading advertising by law firms and claims management companies
- Deductions from compensation of up to 30 percent
- Failure to advise claimants of free alternatives such as the FCA scheme
These issues are now central to whether a case will be viable from both a legal and insurance perspective.
Firms pursuing high-volume claims must now formally declare their understanding of the relevant rules. Temple’s underwriting approach already reflects these concerns. ATE cover will only be considered where firms can demonstrate full regulatory compliance and individual case assessment.
The Temple perspective
Temple Legal Protection has not withdrawn from this area, but our commercial team has refined its approach. We are prepared to consider insuring car finance claims but expect a robust risk assessment process and clear controls on case quality and marketing conduct.
ATE cover will be considered on a case-by-case basis, or as part of a pilot group, where:
- Claims fall outside the expected scope of the FCA scheme
- The law firm can demonstrate full compliance with regulatory expectations
- The claims are supported by strong documentary evidence of unfairness
Premium structures may be staged or deferred, and we are open to discussing indicative terms in advance of formal risk placement. This reflects our view that there is still value in pursuing meritorious claims – but only where they are selected and run with care.
Looking ahead – business energy commission claims
The Supreme Court’s forthcoming decision in Expert Tooling and Automation Ltd v Engie Power Ltd is likely to shape the next phase of undisclosed commission litigation. This case addresses payments made by energy suppliers to brokers who purport to act independently when sourcing business energy contracts.
Temple expects to see a new wave of claims emerge if that ruling is favourable to claimants. One cannot predict the outcome in Expert Tooling in the light of Hopcraft. Whilst the UKSC was clear that accessory liability required proof of dishonesty and emphasised how difficult that could be, the judgment in Expert Tooling contained some potentially helpful observations around the tort of bribery.
Our approach to energy claims is to engage with potential solicitors now, so that terms, premiums and eligibility criteria for energy cases can be agreed in principle. However, we would not expect any case to be put on risk until after the judgment is handed down in the autumn. That would support a realistic target for business energy claims to begin from early 2026.
A final note for litigators
The Supreme Court may have narrowed the issue in car finance claims to the issue of unfairness. For commercial litigators who understand the limits of the judgment – and who are prepared to commit to proper risk assessment, regulatory compliance and evidential rigour – there is still scope for a viable litigation model.
Temple remains open to discussing cover for these cases, and we will continue to monitor developments, including the FCA consultation and further judicial guidance, with a view to supporting properly framed litigation where the legal and factual basis is clear.
For more information about this topic or to discuss a commercial dispute case please contact Matthew Pascall on 01483 577877 or via email to
Matthew Pascall
Legal Director – Head of Commercial
Matthew Pascall
Matthew was called to the Bar in 1984 and joined Guildford Chambers two years later. Spending more than 30 years in practice there, he was listed as a Legal 500 Tier One barrister.
He joined the commercial team at Temple Legal Protection as Senior Underwriting Manager in 2017.
Matthew was appointed to Temple’s Board in December 2022 as Legal Director and Head of Commercial.
His knowledge of the commercial legal sector and litigation practice is invaluable to the business and our clients, providing specialist experience to lead the commercial litigation insurance team.
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