Handling Car Finance Claims: Interim Guidance for Insolvency Practitioners Following the Supreme Court Ruling.
GUIDANCE FOLLOWING THE HOPCRAFT RULING AND WHAT IT MEANS FOR PRACTITIONERS, ACCOUNTANTS, AND CONSUMERS.
The Supreme Court’s landmark decision in Hopcraft v Close Brothers has reshaped how motor finance agreements are viewed across the UK. While insolvency practitioners await full guidance on affected cases, the ruling also holds important lessons for accountants, advisers, and consumers alike.
BACKGROUND: THE HOPCRAFT CASE AND WHY IT MATTERS
The case of Hopcraft and another (Respondents) v Close Brothers Limited (Appellant), decided by the UK Supreme Court on 1 August 2025, centred on discretionary commission arrangements in the motor finance sector.
For many years, some lenders allowed car dealerships and brokers to set interest rates on finance agreements, earning higher commissions by charging customers more. This practice, often undisclosed to the borrower, created a clear conflict of interest — where consumers paid more without understanding why.
In Hopcraft, the Supreme Court found that these arrangements breached fairness obligations under the Consumer Credit Act 1974 and FCA Principles for Business Conduct, confirming that customers had been treated unfairly and were potentially entitled to compensation.
The ruling has far-reaching implications — not just for motor finance lenders, but also for how financial products are structured, sold, and disclosed across multiple sectors.
THE FCA’S RESPONSE AND NEXT STEPS
Following the judgment, the Financial Conduct Authority announced plans to consult on a redress scheme for consumers affected by unfair motor finance commission practices.
This consultation, expected to be released by October 2025, will shape how compensation claims are processed and how lenders, administrators, and insolvency practitioners should manage them.
The FCA has stated that it intends the scheme to be:
Simple and transparent, allowing direct claims from consumers without needing legal or claims management assistance.
Fair and consistent, ensuring all eligible consumers are treated equally.
Operational by 2026, following consultation and feedback from financial industry stakeholders.
INTERIM GUIDANCE FROM RECOGNISED PROFESSIONAL BODIES (RPBS)
Considering the uncertainty surrounding the full scope and value of the forthcoming redress scheme, the Recognised Professional Bodies (RPBs) have issued joint interim guidance for insolvency practitioners.
The guidance advises against speculative investigation into car finance claims across insolvency portfolios, including:
Individual Voluntary Arrangements (IVAs)
Protected Trust Deeds (PTDs)
Sequestrations and bankruptcies
RPBs have stressed that:
Such reviews are currently premature and speculative.
Related fees would not meet SIP 9’s test of fair and reasonable remuneration.
Practitioners should not delay case closures pending compensation outcomes, as doing so could unfairly disadvantage debtors who have fulfilled their obligations.
Practitioners should also refrain from engaging claims management companies (CMCs) or encouraging debtors to do so before the FCA publishes its final guidance
HOW THIS FILTERS DOWN TO CONSUMERS AND ADVISERS
While much of the interim guidance focuses on insolvency practitioners, the Hopcraft ruling and FCA’s response have broader implications for the financial and advisory community.
For consumers:
Millions of car finance agreements arranged between 2007 and 2020 could now be reviewed for fairness. Consumers who took out finance during this period may be eligible for compensation if they were charged excessive interest linked to commission models.
The forthcoming FCA scheme will allow individuals to claim directly — without third-party intermediaries — keeping the process free and accessible.
For accountants and financial consultants:
Professionals advising clients on debt, personal finance, or insolvency should be aware of:
Potential future claims that may affect client cash flow or debt positions.
The need to disclose or account for compensation in relevant financial planning or restructuring discussions.
The importance of due diligence when reviewing historic credit agreements or advising on insolvency-related recoveries.
As the FCA’s consultation and redress scheme evolve, financial advisers will play a key role in educating clients, ensuring expectations are realistic, and helping consumers engage responsibly with any compensation process.
NEXT STEPS FOR PRACTITIONERS AND ADVISERS
The FCA is expected to launch its formal consultation by late 2025, with implementation targeted for 2026. Until then, insolvency practitioners, accountants, and financial consultants are advised to:
Monitor FCA updates and any subsequent RPB or professional body guidance.
Avoid speculative claims or fee recovery attempts linked to potential compensation.
Prepare internal teams to handle client queries accurately and consistently.
Review case management policies once the redress scheme framework is finalised.
Voscap will continue to monitor developments as both the FCA consultation and RPB guidance evolve.
If you are an insolvency practitioner, accountant, or financial adviser with clients potentially affected by the Hopcraft ruling, our team can provide practical, confidential guidance on how to manage compliance and client expectations.
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