Picture by: @KATRIN BOLOVTSOVA
On Friday, 1 August 2025, the Supreme Court handed down a long-anticipated judgment in three “test cases” that would shape the future of car finance claims in the UK. One of those cases was Wrench v FirstRand Bank Limited, where Consumer Rights Solicitors acted for the respondents.
The case was seen as a key opportunity to hold car dealers and lenders legally accountable for commission practices that could inflate the cost of loans. At its heart was an attempt to challenge the industry model where a dealer could profit more by arranging finance at a higher interest rate, a structure which the Financial Conduct Authority (FCA) has since banned for creating a conflict between the broker’s interests and the borrower’s. Andrew Wrench’s agreement contained exactly this type of discretionary commission arrangement (DCA), and his claim sought to establish that such practices made the lender–borrower relationship unfair in law.
The Court of Appeal had previously ruled in Mr Wrench’s favour. Yet, in a significant turn, the Supreme Court disagreed. The outcome confirmed that a DCA on its own is not always enough to make a finance agreement “unfair” in law, and that other aggravating factors are needed for a successful claim.
Background to the Case
Andrew Wrench bought his car using a finance agreement arranged by a dealership, funded through MotoNovo Finance, a division of FirstRand Bank. The arrangement allowed the dealer to set the interest rate within a range approved by MotoNovo.
The higher the rate chosen, the more the dealer stood to earn. Mr Wrench argued that this arrangement increased the cost of his loan without his informed consent, and that the payments to the dealer operated like a hidden bribe. He also claimed the dealer had a duty to act in his best financial interests, rather than their own.
His claim was selected as one of three “test cases” before the Supreme Court, each intended to clarify the legal limits on commission arrangements in motor finance. Mr Wrench’s case was heard alongside Marcus Johnson and Amy and Carl Hopcraft, allowing the Court to compare different types of commission structures and disclosure practices.
You can explore our in-depth analysis of the Johnson and Hopcraft cases in the CRS blog.
What is a Discretionary Commission Arrangement?
Definition
The FCA defines a discretionary commission arrangement as a set-up where a lender allows the credit broker (often a car dealer) to choose the interest rate for the customer from within a permitted range. The broker’s commission increases when the customer is charged a higher rate.
In January 2021, the FCA banned DCAs in motor finance agreements, stating that they created “an obvious conflict of interest between the broker and the customer” and could lead to customers paying more than necessary.
Why DCAs are Controversial
From a consumer’s perspective, DCAs put the dealer’s financial interest directly at odds with the buyer’s. The more you pay in interest, the more the dealer earns.
While the arrangement might be disclosed in small print, many buyers are unaware of how it works and that it could be adding hundreds or even thousands of pounds to the total cost of their car.
The Legal Arguments in Wrench’s Case
Bribery/Secret Commission
Definition
In civil law, a secret commission is a payment made to an agent without the knowledge and fully informed consent of the principal, intended to influence the agent’s actions. This principle was set out in Hovenden & Sons v Millhoff [1900–3] All ER Rep 848 and remains the foundation for “civil bribery” claims. The element of secrecy is therefore critical. A payment is not legally a “secret commission” if the principal knows about it, regardless of whether the exact amount is disclosed.
How the Court applied it in Wrench
Mr Wrench argued that the dealer’s commission was a hidden bribe because it incentivised the dealer to set a higher interest rate. The Supreme Court found that his finance agreement mentioned that commission may be paid, which was enough to defeat the “secrecy” element. Without secrecy, the civil bribery claim could not succeed, regardless of whether the commission affected the loan’s cost.
Fiduciary Duty
Definition
A fiduciary duty is a legal obligation of loyalty that arises when one party undertakes to act for another in a position of trust and confidence. Key duties include acting in good faith, avoiding conflicts of interest, and not making unauthorised profits without the other party’s fully informed consent. This principle is reflected in the Law Commission’s report Fiduciary Duties of Investment Intermediaries (Law Com No 350).
How the Court applied it in Wrench
Mr Wrench argued that the dealer owed him a fiduciary duty to act in his best financial interests when arranging his loan. The Supreme Court rejected this, holding that in standard retail motor finance transactions, dealers are not fiduciaries unless they have expressly undertaken to act solely in the consumer’s interests. No such undertaking existed here, so no fiduciary duty was owed.
Unfair Relationship
Definition
Section 140A of the Consumer Credit Act 1974 allows the court to find a credit relationship “unfair” because of:
- The terms of the agreement,
- How it has been operated or enforced, or
- Other acts or omissions by the creditor or its agents.
It is a broad statutory test, and proof of dishonesty is not required. The court can consider all the circumstances, including the degree of transparency and the impact on the borrower.
How the Court applied it in Wrench
The Supreme Court found that a discretionary commission arrangement on its own does not automatically make a relationship unfair under s.140A. Additional factors such as a very high commission percentage, poor or misleading disclosure, or hidden exclusivity between dealer and lender would be needed.
BBC Interview: Andrew Wrench and Kavon Hussain React to the Ruling
In a BBC interview after the Supreme Court ruling, Andrew Wrench voiced disbelief at the decision overturning his Court of Appeal win. He said he had no idea dealerships were being paid commission by his lender, MotoNovo Finance, when he bought two cars in 2015 and 2017.
“If you fail to disclose something up front and be open and honest, I disagree. And that’s why, 24 months ago, I started this.”
Wrench explained that commission references were buried in small print without figures or context. It was only during a later purchase that he spotted the word “commission” and halted the sale until contracts were corrected.
Kavon Hussain, Principal of Consumer Rights Solicitors, told the BBC the case was about transparency and the consumer’s right to make informed choices.
“If a consumer knows everything that’s going on, they can make the right choice, and that’s how it should be.”
The Court ruled that dealers are not fiduciaries and that general disclosure of commission was enough to defeat Mr Wrench’s claim in law. However, Hussain pointed out that the judgment still leaves scope for cases where commissions are discretionary or fixed but set at unusually high levels. This is consistent with the FCA’s announcement on 3 August 2025, confirming it will move ahead with plans for an industry-wide compensation scheme.
Want to know exactly how the FCA’s planned redress scheme could affect you, what types of cases it will cover, and when payouts might begin?
Read our full article on the FCA’s motor finance redress plans.
What This Means for You
The Wrench decision reinforces that not every discretionary commission arrangement (DCA) will lead to compensation. While the Financial Conduct Authority banned DCAs in January 2021 due to the conflict of interest they created, the Supreme Court has now made it clear that additional factors are required for a successful unfair relationship claim.
Want to know exactly what extra factors you need on top of a DCA to make a valid claim?
Read our detailed article that breaks it all down.
Your Rights, Our Commitment
At Consumer Rights Solicitors, we believe consumers should not bear the cost of finance practices that make loans more expensive without their fully informed consent. If you arranged car finance before January 2021 and suspect the terms were unfair, you have the right to have your case assessed.
We offer:
- Free initial case assessments
- Clear, practical advice on your eligibility
- No Win No Fee representation for qualifying claims
Contact Consumer Rights Solicitors today to see if you can still recover money paid through unfair finance arrangements.
