Equity, consumers and secret commissions: the developing law

Through the lens of the recent motor finance litigation, this chapter examines how judge-made fiduciary law overrides the contractual starting point that the parties be held to their terms where the claimant is a vulnerable consumer and the agency problem arises. The specific problem was that dealers and brokers, by taking secret commissions and restricting the range of lenders, corrupted their impartiality. It asks how this quasi-regulatory law can solve this problem and examines its limits after its retrenchment in the motor finance litigation. The statutory-regulatory regime of the Consumer Credit Act 1974 having supplanted the judge-made law in motor finance cases, the chapter examines the relationship between two. After assessing fiduciary law’s advantages and disadvantages in this field, it critically discusses the difficulties of developing such ‘ground up’ protection from the general law.