The Supreme Court began hearing the grounds of appeal by the Appellant lenders. The lenders' submissions focussed on whether the credit brokers (car dealers) owed implied fiduciary duties and/or a common law "disinterested duty". The Appellant lenders disagreed with the imposition of an implied fiduciary duty on dealers, emphasising the commercial nature of the transactions, the relevance of existing legislation and regulatory consumer protections shaping the relationship sufficiently without common law extending them and the nature of the dealer-customer relationship overall: on this, they argued that there has been no express or implied undertaking by the brokers to adopt a fiduciary duty to the customer. When the relationship between the customer and the broker-dealer was looked at end-to-end, without segmenting the broking activity and ignoring the act of selling the car, there were more indications that no fiduciary duty could be implied. The Appellant lenders submitted that importantly, there had been no subordination of interests by the car dealer in favour of the customer and therefore the duties could not be implied.

On the disinterested duty, which the Appellants said could not in any event exist in a wider set of circumstances than an implied fiduciary duty, the Appellants made submissions that the tort of bribery should be abolished on the basis that the law already provides suitable remedies for breaches of fiduciary duty in equity. 

The Appellants also addressed the accessory liability of lenders in case their arguments on the absence of a fiduciary duty were to fail. The main focus was around the test for dishonesty and they said that the dishonesty was not made out on the facts of these cases.

The second day began with the Appellant lenders concluding their submissions. They focussed on emphasising the requirement for dishonesty in bribery cases and the unfair relationship provisions in s.140A of the Consumer Credit Act 1974. On that claim, the Appellants argued that commissions in motor finance differ from Payment Protection Insurance commissions and are not inherently unfair because the commission is paid for a service provided. The Court also heard from National Franchised Dealers Association (NFDA) as intervenor, who tried to provide a more holistic picture of the role of the dealer. The NFDA submitted that, as the national regulator for dealerships, it has never understood dealers to have fiduciary duties. The NFDA said that it was created in 1914 and for over 100 years it has been well known, understood and accepted that commission was a normal part of the hire purchase process, not a corrupt practice. The NFDA also emphasised the impact on the market if dealers are found to owe such duties.

Day 2 concluded with the first submissions from the Respondents (customers). They argued that the car dealer owed an implied fiduciary and disinterested duty to consumers on the basis they had a role in the decision-making process of the customer and that this was the correct test. In contrast to the Appellant lenders, the Respondents said the Court should separate the two distinct stages of the transaction performed by the brokers, as between car sale and credit broking, and not see the relationship between the broker and customer as a whole.  The Court should look only at the broker's credit broking step to decide if a fiduciary duty arises. The Respondent customers also argued that all three cases engaged the tort of bribery on the basis that the customers had no knowledge of, or had not given their consent to, the payment of commission. The Respondent customers argued that the tort of bribery had developed for good reason and has been applied correctly and consistently in case law and should not be abolished.

The Respondent customers continued with their submissions on the third day. They extensively reviewed past case law and evidence provided in these cases to seek to support their position on disinterested duty. They argued that the statutory and regulatory framework for credit broking and motor finance does not take precedence over, and should not influence the Court's view of, the extent of the common law over that activity. They said the Court must apply the common law in the usual way without allowing statute and regulation to influence its application, and it would then be for Parliament to respond if they wish. The Respondents also made further submissions that the commission was secret on the basis that disclosures were "hidden" in terms and conditions. The Respondents argued that Wrench was also a secret commission case that engaged the tort of bribery as the commission was paid without the customers' knowledge and consent.

The Financial Conduct Authority (FCA), as an intervenor, emphasised public interest and its importance in resolving the matter for consumer protection and market certainty. The FCA also highlighted its plans to arrange a redress scheme (post-judgment) and concerns about the broad impacts of implying a fiduciary duty on regulated markets. The FCA were keen to stress the importance of the regulatory framework but did not go so far as to argue that this should prohibit the development of the common law – they said there should be a balance.

The FCA did not agree that the tort of bribery should be abolished in its entirety. Regarding duties, the FCA submitted that treating all motor dealers as fiduciaries would be too broad and would dilute the duty. It also did not think that  a disinterested duty arose more broadly than a fiduciary duty, but it did indicate a disinterested duty might arise.  The FCA also did not agree with the Court of Appeal's broad read-across from Plevin on unfairness under s.140A of the Consumer Credit Act 1974.

The day concluded with some responding arguments from the Appellants: they made some overarching points about the operation of the motor finance industry over time and how the position being put forward by the Respondents is out of kilter with the market and the regulatory framework. Finally, the Appellants were keen to point out the limitations of the Claimants witness evidence, which was proforma and they said that little weight should be attached to it.

For copies of our daily emails summarising the hearing arguments in more detail, contact Sarah Thomas or Jen Hedley.