By Steve Conley
Founder, Academy of Life Planning
Member, Transparency Task Force Advisory Board
For decades, consumers have been assured that financial institutions act in their best interests. From glossy advertising to friendly face-to-face meetings with brokers and advisers, the public is encouraged to believe that customer-facing staff—whether in banks, insurers, or wealth firms—are working for them.
This, we now know, is a legal fiction.
In a landmark decision published 1st August 2025, the UK Supreme Court ruled that car finance brokers do not owe a fiduciary duty to act in the interests of borrowers. They are not obliged to act impartially between the lender and the customer. Nor are they required to disclose commissions—even where those commissions create a clear conflict of interest and inflate the cost of borrowing.
This ruling overturned earlier Court of Appeal decisions which had found that secret and half-secret commissions could constitute a bribe—effectively rendering many car finance agreements unlawful. The Supreme Court’s intervention has now removed this interpretation. The result? A tidal wave of consumer claims has been swept away overnight. And with it, any remaining illusion that the intermediary is on your side.
A Legal Admission: You Cannot Trust the Broker
This decision isn’t just about car finance—it’s a judicial admission that the UK’s financial intermediation system is structurally untrustworthy. It confirms what many campaigners have argued for years: customer-facing staff and their agents are often commercially aligned with product providers, not consumers.
This is a model built on asymmetry:
- The consumer believes they’re receiving advice.
- The intermediary knows they’re making a sale.
- The regulatory system permits this confusion.
In legal terms, the broker or adviser owes no duty of loyalty, and no obligation to disclose material conflicts, unless they are contractually or statutorily required to do so. This fundamentally undermines informed consent, transparency, and consumer confidence.
Contrast: What Would Happen in the United States?
The UK’s permissive framework stands in sharp contrast to the United States, where transparency and fiduciary standards—though not universal—are far more robust in both legislation and case law.
For example:
- Under the Truth in Lending Act and Regulation Z, U.S. brokers and lenders must provide clear disclosures of all costs, APRs, and fees, and steering consumers to higher-cost products for greater commission is prohibited.
- In certain states, mortgage brokers and credit advisers are held to fiduciary standards—especially where an agency relationship is formed, or the borrower is considered financially vulnerable.
- U.S. investment advisers (registered under the Investment Advisers Act of 1940) are held to strict fiduciary duties, requiring them to act in the best interests of the client, disclose conflicts, and avoid self-dealing.
While the U.S. system is far from perfect, its default orientation is toward consumer protection through transparency and duty. In contrast, the UK model protects institutional convenience and distribution economics.
The Broader Consequences: A Race to the Bottom
The implications of the Supreme Court ruling are not limited to individual redress. The decision undermines public confidence in the integrity of financial markets at a structural level.
Here’s what’s at stake:
🧨 Market Integrity
Consumers who realise they cannot trust the advice they receive are less likely to engage confidently with financial products. This discourages long-term saving, investment, and responsible borrowing. Trust is the lubricant of modern finance—without it, friction increases, and participation declines.
💸 Misallocation of Capital
When financial intermediaries are incentivised to sell products that maximise their commission rather than meet customer needs, capital is misallocated. Products are oversold, unsuitable arrangements persist, and financial outcomes deteriorate. This ultimately leads to economic inefficiency and long-term harm to household wealth.
📉 Undermining the Growth Agenda
The UK government has linked financial deregulation to economic growth. But the Supreme Court’s ruling illustrates how this growth model is flawed. By removing legal accountability from brokers, we may see a short-term uptick in credit issuance—but at the expense of future market credibility, regulatory legitimacy, and systemic stability. This is not sustainable growth—it is financialisation masquerading as reform.
⚠️ Increased Risk of Crisis
Many of the seeds of the 2008 global financial crisis were sown in commission-based mis-selling, opaque risk transfer, and regulatory capture. By signalling to firms that they can sell conflicted products with impunity, the UK is sleepwalking back into similar territory. Without strong consumer protections and fiduciary standards, we create a landscape ripe for systemic abuse.
A Call to Rebuild Trust
Trust is not a ‘nice-to-have’ in financial services. It is the core operating principle. Without it, markets stagnate, households retreat, and crises spread.
It is no longer credible to suggest that voluntary codes, disclosure regimes, or light-touch regulation can protect consumers. The system is built on institutionalised conflicts, and we now have Supreme Court confirmation that these conflicts are lawful.
We must learn from jurisdictions that centre the consumer, restore fiduciary principles, and recognise that market trust and national prosperity are inseparable.
Until then, the message to consumers is stark:
You cannot trust the customer-facing staff of financial institutions—or their agents—to act in your best interests. And the law says they don’t have to.
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