UK Supreme Court Hears Crucial Case on Motor Finance Commissions

By Tom Webster |

The following was contributed by Tom Webster, Chief Commercial Officer for Sentry Funding.

At the start of this month the Supreme Court heard an appeal in three motor finance test cases with huge ramifications for lenders.  

In Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd and Hopcraft v Close Brothers Ltd, the appeal court held last October that the car dealers involved were also acting as credit brokers, and owed a ‘disinterested duty’ to the claimants, as well as a fiduciary one. It found a conflict of interest, and no informed consumer consent to the receipt of the commission, in all three cases. But it held that that in itself was not enough to make the lender a primary wrongdoer. For this, the commission must be secret. However, if there is partial disclosure that suffices to negate secrecy, the lender can still be held liable in equity as an accessory to the broker’s breach of fiduciary duty.

The appeal court found there was no disclosure in Hopcraft, and insufficient disclosure in Wrench to negate secrecy. The payment of the commission in those cases was secret, and so the lenders were liable as primary wrongdoers. In Johnson, the appeal court held that the lenders were liable as accessories for procuring the brokers’ breach of fiduciary duty by making the commission payment.

The appeal court ruling sent shockwaves through the industry, and the two lenders involved, Close Brothers and FirstRand Bank (MotoNovo), challenged the decision in a three-day Supreme Court hearing from 1 – 3 April. Commentators have pointed to the huge significance of the case, which could lead to compensation claims of up to £30bn. Close Brothers is reported to have set aside £165m to cover potential claims, while FirstRand has set aside £140m. Other lenders are reported to have set aside even more substantial sums:  £1.15bn for Lloyds, £290m for Santander UK and £95m for Barclays. 

The Financial Conduct Authority is considering setting up a redress scheme to deal with claims, which is currently on hold as it awaits the judgment of the Supreme Court this summer.

Will the Supreme Court uphold the lenders’ appeals, or will the Court of Appeal’s logic win out? My own view is that the appeals are likely to fail, and October’s Court of Appeal decision will be upheld. Lenders will therefore face substantial compensation bills as they find themselves faced with a huge number of claims. What’s more, the ramifications of this significant Supreme Court ruling are likely to reach beyond the motor finance sector, to other areas where businesses provide credit through intermediaries who take a commission, without making that crystal clear to the consumer.

Sentry supports litigation funders looking to deploy funds into cases in which consumers were not aware of the commissions they were being charged when they bought a car on finance, as well as a number of other miss-selling and hidden commission claim types.

About the author

Tom Webster

Tom Webster

Tom is the Chief Commercial Officer for Sentry Funding

Commercial

View All

Gerchen Capital Partners Targets Corporate Monetizations and Late-Stage Cases with $600m Fund

By Harry Moran |

While some funders are looking towards the secondaries market as a way to expand their investment opportunities, one funder is moving in the opposite direction following the closing of its sixth fund. 

Reporting by Bloomberg Law covers the closing of a $600 million fund by Gerchen Capital Partners (GCP), with this latest fund representing a shift in the company’s strategy to expand its investments beyond the secondaries market. The new fund’s capital is set to be dedicated towards two key areas: monetizing litigation portfolios for corporations and funding late-stage or post-settlement matters.

Adam Gerchen, CEO of GCP, spoke with Bloomberg Law about the closing of the company’s sixth fund and explained that the funder’s original focus on secondaries was about addressing “this unmet market need.” On the pivot towards corporate monetization, Kelly Daley, managing director at GCP, suggested that it can be a valuable offering due to the level of instability in the financial market, arguing that “the more uncertainty there is in the market, the more appealing certainty is”.

The article also highlighted GCP’s growth over the past three years since it was founded, with around $1.9 billion in assets raised over that time. The growth has been bolstered by the recruitment of experienced industry professionals, like Daley, from other funders including Burford Capital. Daley explained her decision to move to GCP from Burford as being driven by the culture of the growing funder, saying: “The ability to be in a more nimble entrepreneurial environment was appealing to me.”

Burford Reports 1Q25 Financial Results

By Harry Moran |

Burford Capital Limited ("Burford"), the leading global finance and asset management firm focused on law, today announces its unaudited financial results for the three months ended March 31, 2025 ("1Q25"). The full detailed presentation of Burford's 1Q25 financial results can be viewed at http://investors.burfordcapital.com.

Burford's Chief Executive Officer Christopher Bogart commented:

"Burford delivered robust first quarter results in what is typically a lighter seasonal period, demonstrating the continued momentum of our portfolio. Both new business and realization activity were well above first quarter levels in recent years, establishing a great start to the year. We believe the uncorrelated nature of legal finance positions our business to perform through the volatile and uncertain market environment that investors face today. We remain focused on the core drivers of shareholder value discussed at our recent 2025 Investor Day: Growing the platform, turning the current portfolio into cash realizations and generating attractive returns on capital."  

Burford will hold a conference call for investors and analysts at 9.00am EDT / 2.00pm BST on Wednesday, May 7, 2025. For swift access to the conference call at the time of the event, pre-registration is encouraged at https://registrations.events/direct/Q4I881854. The dial-in numbers for the conference call are +1 (646) 307-1963 (USA) or +1 (800) 715-9871 (USA & Canada toll free) / +44 (0)20 3481 4247 (UK) or +44 800 260 6466 (UK toll free), and the access code is 88185. To minimize the risk of delayed access, participants are urged to dial into the conference call by 8.40am EDT / 1.40pm BST.

A live audio webcast and replay will also be available at https://events.q4inc.com/attendee/989634259, and pre-registration at that link is encouraged.

About Burford Capital

Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR) and works with companies and law firms around the world from its global network of offices.

For more information, please visit www.burfordcapital.com.

Ciarb Releases Proposed Guidelines on Third-Party Funding

By Harry Moran |

With the growing prominence of third-party funding in arbitration proceedings, industry bodies are keen to establish best practices for those involved in funded matters, and to increase the broader levels of knowledge among all members of the wider arbitration community.

The Chartered Institute of Arbitrators (Ciarb) has today announced the release of its Proposed Guideline on Third-Party Funding, and has opened a call for comment to source feedback from members of the alternative dispute resolution (ADR) community. 

Ciarb’s guideline is designed to support those involved in arbitration matters to navigate funding arrangements, and to assist all parties and arbitral tribunals to facilitate effective case management of funded proceedings. The proposed guideline is split into two parts, with the first section dedicated to providing a thorough overview of the funding process, whilst the latter part covers all aspects of arbitration proceedings that involve a funded party.

The call for comment is open to both Ciarb members and non-members, with the deadline to submit feedback set for 17 June 2025. The feedback form can be accessed here.

Drafting of the guideline was undertaken by Mercy McBrayer, Head of Arbitration Professional Practice at Ciarb, and Mohamed Sadiq, PPP Intern at Ciarb, and the drafting group committee was co-chaired by Philippa Charles (Twenty Essex) and Dr Hasan Tahsin Azizagaoglu (Bench Walk Advisors). The drafting group’s members also included: Christopher Bloch (Squire Patton Boggs), Julian Chamberlayne (Stewarts), Ayse Yazir (Bench Walk Advisors), Susan Dunn (Harbour), Napoleão Casado Filho (Clasen | Casado Filho | Longo | Caribé), Camilla Godman (Omni Bridgeway), Dana MacGrath (MacGrath Arbirtration), Viren Mascarenhas (Milbank), Kathryn Sanger (Herbert Smith Freehills), and Sarah Vasani (CMS).

Dr Hasan Tahsin Azizagaoglu described the guideline as “a clear and accessible roadmap for legal practitioners”, and noted that it is “unique in its commitment to full transparency”. Philippa Charles explained that although the drafting group “contains representation from practitioners and funders”, the call for comment aims to “ensure that a multiplicity of viewpoints on these matters is contained in the Guideline to make it as useful as possible.”