A recent Supreme Court ruling has left one of the involved drivers “dumbfounded” after it overturned a previous Court of Appeal decision, ruling that lenders are not liable for hidden commission payments in car finance agreements.
What Happened
Marcus Johnson, a 35-year-old factory supervisor from Cwmbran, Wales, was involved in a legal battle after he paid £1,650.95 in commission as part of his car finance agreement with FirstRand for a Suzuki in 2017. The commission was not clearly disclosed to him, and he felt that the car dealership, acting as a credit broker, had not been transparent about the financial arrangement.
In October of the previous year, the Court of Appeal ruled that Marcus Johnson and two other drivers, who also paid commission in their car finance agreements before 2021, were entitled to compensation. The court found that the dealers had failed to clearly inform customers about the commission they would receive from lenders for introducing business.
However, on Friday, the Supreme Court overturned the decision, stating that car lenders are not liable for hidden commission payments. Despite this, the Court allowed Marcus Johnson to keep his compensation and interest, citing that he had been in an “unfair” relationship with the lender.
Reactions and Concerns
Following the ruling, Marcus Johnson expressed his shock and disappointment, stating that he was “dumbfounded” by the decision. “It was surprise and sadness, because I was quite confident, just based on how I felt about it, the unfairness of what happened to me,” Johnson shared. He added that he felt the ruling sent the wrong message to consumers, particularly those who had been overcharged in similar situations.
While Johnson acknowledged that commission was a standard part of the market, he felt that the hidden nature of the charges was unjust. He said, “It sounds like it’s fine to secretly overcharge customers for commission.” Johnson also expressed frustration with the lack of transparency in his contract, noting that there was only one vague sentence in the small print which mentioned commission.
Despite winning the case, Johnson remarked that the ruling did not “sit right” with him, particularly since it meant other consumers would not be able to claim compensation for hidden commissions.
Legal Arguments and Ruling
The Supreme Court ruling, delivered by Lords Reed, Hodge, Lloyd-Jones, Briggs, and Hamblen, stated that car dealers did not have an obligation to act only in the best interests of their customers. The judges concluded that an offer to find the best finance deal for a customer was not the same as offering to act altruistically. They argued that no reasonable observer would expect a car dealer to give up their own commercial objective of securing a profitable sale by disclosing such commissions.
What Happens Next
While the ruling means that Marcus Johnson’s compensation will stand, it also sends a message that hidden commissions in car finance deals may not always lead to liability for lenders. The ruling may have significant implications for future cases involving hidden charges, particularly in industries where brokers or dealers may be involved in securing finance agreements for consumers.
Marcus Johnson, having acknowledged that he would “steer clear” of hire-purchase agreements in the future, still feels dissatisfied with the judgment, especially for those who were similarly overcharged but will not benefit from the same outcome.
This story may be updated with more information as it becomes available.
