From legal definitions to operational realities: who feels the impact?
21 August 2025
In this section of the webinar, our experts unpack the Supreme Court’s nuanced stance on commission arrangements – recognising that while such payments may be legal, the fairness of each case depends on its specific circumstances. Using the Johnson case as a focal point, they explore factors such as commission size, disclosure practices and consumer characteristics that could tip the balance towards an “unfair relationship” under the Consumer Credit Act.
The conversation also highlights the operational realities this creates for creditors, brokers and claims management companies (CMCs) and how the FCA’s forthcoming consultation could shape redress scope and processes.
Gary Maude- Director of Advisory Services for TCC Group
Very quickly, the Supreme Court ruled that in many cases, commission payments could be legal, but also that in circumstances yet to be prescribed and wasn’t part of their deliberation may not be fair. So, for example, in the case of Johnson and the size of the commission paid and the manner in which it was disclosed, in terms of transparency, led to the conclusion that the relationship was unfair.
The Supreme Court stated, as many of us will know, the several factors, could indicate an unfair relationship or contravene the CCA, whilst equally recognising it depends on the facets of each case individually, which is very helpful when, someone like Mike is trying to set up a process for a past business review. And just for those who aren’t aware the factors could include the size of the commission with Johnson’s 55% relative to the charge of credit, the nature of commission whether it’s discretionary or none, the characteristics of the consumer again, does that imply that some customers would be excludable because they’re sophisticated. All these things were yet to learn compliance with regulatory rules.
Interesting, in this point in this in this sort of case that you could argue it was compliant in terms of disclosure, but the transparency, placement, etc., of the act of disclosure was what caused the scrutiny. Hence the extent and manner of the disclosure. The FCA, will now have to consider the above when deciding which cases should fall within the scope of redress scheme, but rightfully that’s going to be straightforward.
In our opinion, not least, things like opt in, opt out. When I read this as respect to a number of in a legal contacts, it felt as though, whether or not that the Treasury, pressure or influence the FCA was looking to reduce the cost and reduce the burden on lenders by way of an approach to this. However, when Mike and I spoke about this recently, we’re just wondering if it’s in some ways the opposite, because you’re having to upskill to other people doing that work. So there were those type of considerations, not least, when does the commission stop being fair and becomes unfair? Is there a pivot point, etc., etc..
The FCA now committed to doing consultation for October 25. Beyond this, the FCA anticipates that scheme will be finalised in time for complainants to start receiving compensation scheme next year. And whether it be opt in, opt out combination of the two, depending on circumstances I think will be really interesting for those of you who’ve got backlogs of complaints and whether or not you can carve any of those out or whether or not they have to stay in pending some other type of approach the FCA have yet to prescribe.
I mean look at the implications for stakeholders. What might that be, for creditors this could be a much larger, potential for exception population, a lot more work to determine where complaint has a case for consumers, a lot more confusion about whether they qualify for a payment. Do they have to opt in if they have made a complaint already, etc.? Are they going to have to try their luck via CMCs if some PBRs are unclear, too aggressive, lack of consistency in approach across the industry.
For CMCs, is this the lifeline back into motor finance again? I personally got the impression the FCA were trying to discourage customers from using CMCs if possible to, to move the progress for all, new complaints will be filled, potentially with time consuming DSAR requests by CMCs. Do you want to dispute your outcomes? And for brokers, car dealerships, there’s now perhaps got to be a refreshed review of fair value assessment from a Consumer Duty lens. And, looking again at the B2B, B2C relationships, CMC focus will be split between creditors and those at the end of the commission payment. So overall, I can’t help thinking there are going to be a big need for complaint handlers, for anyone with a backlog of complaints. Over to you, Garry.
Garry Evans- Chief Product Officer and Chief Commercial Officer for TCC Group
Thanks, Gary. On that basis, then where we expect a kind of lower redress provision overall because of the exclusion of kind of, none DCAs an en-masse blanket kind of opt in. But their greater complexity in having to assess the complaints.
I want to run a second poll now, if that’s okay. Based on the cost and time required to conduct the remediation process. What impact did this ruling have on the likely cost of remediation? If you exclude the actual redress payments to the clients? And we’ll give you kind of, ten – twenty seconds to have a think about that one, as I’ve given you lots of options with lots of numbers in there. If we can see the results. Wow. I guess the, the kind of just over a third of you struggling to quantify might, might be the reason why there’s such a split across, across all of these.
Ready to see the full webinar – you can watch the full 30 minutes here.
As this discussion shows, the ruling’s complexity extends far beyond simple definitions of lawful and unlawful commission. It raises questions about opt-in versus opt-out schemes, the impact on backlog complaints and the potential resurgence of CMC involvement. Stakeholders across the industry will need to prepare for more bespoke, resource-intensive complaint handling, even if overall redress values fall.
For firms navigating these changes, clarity on FCA expectations, strong governance frameworks and access to skilled remediation teams will be essential. TCC, Recordsure and Momenta are ready to help you interpret the ruling, assess exposure, and design scalable solutions that stand up to regulatory scrutiny.