The prospects of claims against motor finance lenders are in a state of continuous and rapid development. Courts, the Financial Ombudsman Service, and the FCA are grappling with the issues raised by the large volume of cases being initiated. This article provides a detailed overview of the current situation.

Key Developments in the Johnson v Firstrand Bank Case

In October 2024, the Johnson v Firstrand Bank Court of Appeal decision recast the industry consensus on exposure to secret and half-secret commission claims. The motor dealers, acting as credit brokers, were found to have a "disinterested duty" to find the best finance deal. This duty conflicted with their interest in receiving commissions. In fully secret commission cases, lenders had primary liability in the tort of bribery. In half-secret commission cases, dealers had a parallel fiduciary duty and could be liable if they failed to obtain full informed consent. The Court also treated some cases previously viewed as half-secret as fully secret. 2: This decision has significant implications for the motor finance industry, as it clarifies the legal responsibilities of both dealers and lenders. It sets a new standard for disclosure and duty of care, which will likely impact future business practices.

Upcoming Appeals in the Johnson Case

On 11 December 2024, the Supreme Court granted permission to appeal all three joined appeals in Johnson. These appeals are set to be listed before Easter 2025, adding another layer of uncertainty and potential change to the legal landscape. 2: The outcome of these appeals will be closely watched by the industry, as it could further shape the rules and responsibilities regarding commission claims in motor finance.

Ruling Against the Lender in Clydesdale Financial Services Ltd Case

Today, on 17 December 2024, the High Court ruled against the lender in R (Clydesdale Financial Services Ltd t/a Barclays Partner Finance v Financial Ombudsman Service Ltd. The case involved a judicial review challenge to a FOS decision finding the lender liable for breaching FCA Rules. The High Court treated different types of commissions as requiring separate disclosure and upheld the FOS approach to compensation. 2: This ruling has implications for both lenders and consumers, as it clarifies the requirements for disclosure and compensation in motor finance cases.

FCA's Review of Historical Motor Finance DCAs

In January 2024, the FCA launched a review of historical motor finance DCAs. This led to the suspension of usual time periods for regulated firms to respond to complaints and for consumers to refer complaints to FOS. These suspensions were extended in September 2024 and the FCA is also consulting on a similar extension for non-DCA complaints. 2: The FCA's actions indicate its focus on addressing historical issues in motor finance and its efforts to ensure proper disclosure and compliance. The outcome of the consultation will be crucial in shaping the future of motor finance complaints.We are witnessing a flurry of activity on all sides in response to these developments. Claims management firms, claimant-side lawyers, and claims introducers are actively recruiting claimants and pursuing claims. Funders are seeking to deploy capital to support claims. Lenders and motor dealers are assessing their exposure and planning for various scenarios. 2: This dynamic environment is likely to continue as the cases make their way through the higher courts and the FCA finalizes its views. It remains to be seen how these developments will ultimately impact the motor finance industry.