Court of Appeal rules broker commission requires customer's informed consent

The Court of Appeal ruled on 25 October 2024 that it was against the law for brokers to receive a commission of any kind from lenders providing motor finance without the customer's informed consent¹. The decision took aspects of the industry by surprise².

The Financial Ombudsman Service records that the court "ruled that it was against the law for brokers to receive a commission of any kind from lenders providing motor finance, without the customer's informed consent"¹. The Finance and Leasing Association's consumer credit arm, the CCTA, said the court expected defendants "to not only disclose commission amounts and the calculation of the arrangement, but it also expected the defendants to obtain the customer's informed consent"².

The CCTA said the ruling does not apply only to discretionary commission arrangements (DCAs), where the finance provider pays the dealer commission based on the interest rate paid, but to commission arrangements in general, including fixed rate and flat fee commission². The Financial Conduct Authority banned DCAs in January 2021¹. The CCTA said the FCA's review into commission arrangements at that time covered only discretionary commissions, not fixed or flat rate commissions².

The CCTA said the fallout from the decision led to some lenders temporarily pausing further lending². It said the defendants lodged an appeal with the Supreme Court ahead of the 22 November deadline, and that the Supreme Court is not required to take on any appeal and could decide not to². The CCTA said that even a fast track hearing could easily take between twelve and fifteen months².

Why it matters for households

The ruling concerns anyone who bought a car on finance where a dealer or broker arranged the agreement and the lender paid commission. The Ombudsman sets out the main commission types: discretionary commission arrangements, banned since January 2021; fixed rate commission, usually a percentage of what is borrowed; and flat fees paid for each agreement processed or arranged¹.

Complaint handling has been reshaped since. The FCA introduced temporary rules on 11 January 2024 covering complaints where a DCA was involved, extending the time businesses had to respond until after 4 December 2025¹. On 19 December 2024 the FCA extended temporary rules to complaints where a non-discretionary commission arrangement was involved, and extended how long consumers have to refer complaints to the Ombudsman, to at least July 2026¹. On 5 December 2025 the FCA extended the temporary rules covering hire purchase, personal contract purchase and conditional sale agreements from 4 December 2025 until 31 May 2026, and removed the temporary extension for vehicle leasing, or hire agreements, so the normal eight week response and six month referral limits apply again to those¹.

The Ombudsman says new rules for the FCA's motor finance redress scheme were announced on 30 March 2026, covering certain motor finance agreements, and that lenders have been given time to put the scheme in place, so it is likely to take a few months before consumers find out whether they will be awarded redress¹. It says people should wait until they hear from their lender before bringing a complaint to it, and that it cannot look at a case until there is a redress determination or the deadline for providing one has passed, and then only at whether the lender followed the scheme rules¹.

What happens next

The Ombudsman says it is aware of the Supreme Court judgement in the case of Johnson, Wrench and Hopcraft and is considering its impact on its approach to complaints about related issues¹. It also records that on 17 September 2025 the Court of Appeal dismissed a high street bank's appeal against a High Court judgement that had found in its favour, following the High Court's decision on 17 December 2024 in a review of an Ombudsman decision upholding a complaint about a DCA¹. The CCTA said the Supreme Court may decline to hear the appeal, and that a hearing could take twelve to fifteen months². The Ombudsman has not reported the outcome of any Supreme Court decision on the 25 October 2024 ruling.

For background on how commission claims work, see the guide to the motor finance redress scheme, car finance companies and deadlines for car finance commission claims.