Hidden commissions

Three different problems, one street name

People use "hidden commission" to mean three things. The courts do not.

Fully secret. You were not told that the lender would pay the broker at all. You were entitled to proceed on the basis that no such payment was being made. If the broker had a duty to be honest and impartial, the payment can be treated as a bribe or secret commission. Remedies can include rescission of the contract, or the amount of the commission, depending on the facts and on whether it is still possible to unwind the deal.

Half-secret. You were told there might be a commission, but not the amount, or the disclosure was buried. Older cases (Hurstanger Ltd v Wilson [2007] EWCA Civ 299) treated this as a different animal: the court has a discretion as to relief, rather than an automatic unwinding. A sentence in terms and conditions that "we may receive a fee from lenders" is the classic half-secret attempt. Whether it works depends on whether you were fairly put on notice.

Unfair relationship. Under sections 140A–140C of the Consumer Credit Act 1974, a court can reopen a credit agreement if the relationship is unfair. This is a consumer and small-agreement tool. It is not a general commercial-finance wipe. Most genuine SME facilities are outside the Act. Do not build a rescue plan on s.140A unless a solicitor has told you the agreement is in scope.

If someone promises you that "the PPI cases" or "the car finance cases" mean your merchant cash advance will be written off, they are selling a different product. Ask which statute, which case, and whether your facility is a regulated credit agreement. Then read the judgment yourself.

Wood: the commercial broker case you should actually know

Wood v Commercial First Business Ltd; Business Mortgage Finance 4 plc v Pengelly [2021] EWCA Civ 471.

Two borrowers. Business-purpose mortgages. Unregulated. The same broker. The lender paid the broker a commission. The broker's terms said they may receive fees, and that they would tell the client the amount in writing before the mortgage was taken — a band if it was small, the exact figure if it was larger. On the evidence, that written notification never came.

The Court of Appeal held three things directors still need.

1. You do not need a full fiduciary relationship as a pre-condition for civil remedies against a secret commission. The question is whether the broker was under a duty to provide information, advice or recommendation on an impartial or disinterested basis — a duty to be honest and impartial.

2. A "we may receive fees" clause does not save the payer if the same terms promised a later written figure and that figure never arrived. The borrowers were entitled to proceed as if no commission was being paid. The commissions were fully secret, not half-secret.

3. Where a secret commission was paid to someone under that duty, rescission can follow — the contract can be set aside — subject to the usual bars (delay, affirmation, impossibility of restoring the parties).

Wood is not a consumer story. It is a business-mortgage story. It is the closest reported analogue to a commercial broker who told you they were finding a deal, took a fee from you, and also took a cheque from the lender that you never saw.

It is also not a machine that converts every undisclosed pound into a winning claim. The duty to be impartial has to be there. A broker who told you, clearly, "I am a salesman for this one lender" is in a different box. That is why the next case matters.

Hopcraft 2025: what the Supreme Court actually did

Hopcraft v Close Brothers Ltd; Wrench v FirstRand Bank Ltd; Johnson v FirstRand Bank Ltd [2025] UKSC 33, 1 August 2025.

Three motor-finance customers. Dealers arranged hire purchase. Lenders paid the dealers a commission. Some disclosure, some none. The Court of Appeal had stretched the law. The Supreme Court pulled it back.

The dealers did not owe a fiduciary duty of loyalty in a typical car-finance shop. They were selling a car and arranging finance as part of that sale. That relationship was not compatible with an obligation of undivided loyalty. Claims in the tort of bribery, and in equity as accessories to a fiduciary breach, failed.

One claimant, Mr Johnson, still won — not on bribery, but on the Consumer Credit Act unfair-relationship jurisdiction. The commission was very large relative to the charge for credit. The dealer had a restrictive commercial tie (a right of first refusal) that was not properly explained. The documents did not put the role in front of the customer in a way he could be expected to use. The remedy was the commission plus simple interest, not a free car.

If you take one sentence from 2025: undisclosed commission is not automatically a bribe, and *motor dealers are not your broker in the Wood sense*. The Supreme Court went back to orthodoxy. Fiduciary duties are not sprinkled onto every intermediary because money changed hands.

What that means on a commercial file

A warehouse broker who said "we act for you", "we'll find the best deal", "we're independent", and then packed you into the product with the fattest kickback, sits closer to Wood than to Hopcraft. The call created the duty. The terms that say "we are not your agent" are an attempt to write it away after the pitch.

A dealer, or a lender's own introducer desk, who never pretended to be your impartial adviser, sits closer to Hopcraft. You may still have a complaint if the facility is in the Consumer Credit Act and the relationship is unfair. Many commercial facilities are not in the Act.

Do not wait for a court to save a bad facility. Courts are slow. Sweeps are daily. The document you should not have signed is still collecting. The work is to stop the next signature, disclose the number on the last one, and — if the facts are there — take actual legal advice on Wood or s.140A, not a Facebook summary.

Plevin, so you do not misuse it

Plevin v Paragon Personal Finance Ltd [2014] UKSC 61 is the PPI case. A commission that was most of the premium, undisclosed, made the relationship unfair under s.140A. It is a consumer-credit decision about payment protection insurance. It is not a template for an SME working-capital facility. Mention it only so you can tell a claims-management firm that you know the difference.

What to demand, in pounds, before you are bound

Put this in the email. Keep the reply. If they phone, follow with "please confirm in writing".

• The legal name of the lender.
• The product.
• Every fee you will pay, or that will be deducted from the advance, in pounds.
• Every commission, procuration fee, or other payment the lender (or anyone in the chain) will pay the broker or introducer, in pounds, and who pays it.
• Whether the broker is tied, has a first-refusal panel, or is paid more by some lenders than others.
• Whether they are acting as your agent, or as a credit broker for the lender, or as a salesman. One of those. Not all three.

If the answer to the commission question is "we may receive a fee", that is the Wood clause. Ask for the pounds. If the answer is "we are not allowed to tell you", they are allowed to tell you. They would prefer you did not ask.

After you have already signed

Ask anyway. In writing. The lender and the broker. Subject access, if you need it. A facility that is still live can sometimes be refinanced onto a structure that does not keep paying a secret. A facility that has already been paid off may still have a claim — that is for a solicitor, and the limitation clock runs.

The Financial Ombudsman Service can hear some SME complaints against regulated firms. Size tests apply. The event usually has to be after 1 April 2019 for the wider small-business jurisdiction. Many commercial lenders and brokers sit outside the FCA perimeter for business-purpose credit. Help that is actually there covers who can actually hear you.

Strata packages, and every commission we are paid is disclosed to you in pounds before you sign — not buried in small print, not "available on request". We do not lend, and we will not run a claim for you. But if you are refinancing away from a facility like this, we will show you the fee in writing before you are bound, every time. That is the standard the rest of this lesson describes. We just apply it.