Secret Commissions and Disclosure Duties – key risks for brokers and their insurers following the Supreme Court decisions in Motor Finance and Expert Tooling

Introduction

We originally discussed the Court of Appeal’s decision in Expert Tooling and Automation Ltd v Engie Power [2025] EWCA Civ 292 in our Legal Update here. Then, in August 2025, the Supreme Court handed down its Judgment in Hopcraft v Close Brothers Limited, Johnson v FirstRand Bank Limited, Wrench v FirstRand Bank Limited [2025] UKSC 33 (“Motor Finance”), and matters moved on.

The decision in Motor Finance and the subsequent Order of the Supreme Court in Expert Tooling and Automation Ltd v Engie Power Ltd on 9 January 2026, has altered the legal framework surrounding disclosure of commissions by those who owe fiduciary duties, including insurance brokers. 

In this article we discuss the implications of those decisions, how the law has developed and consider how these developments impact insurance brokers and the insurance industry. Arguably, the cases suggest that there is a greater disclosure expectation on brokers in order to meet their legal duties. But what does that mean in practice?  

The Legal Position Prior to Motor Finance 

Before the decision in Motor Finance, the various authorities had developed a concept of "half-secret" commissions - where the client knew a commission existed but not all the details. This was  distinct from "fully secret" commissions - where the client was completely unaware of the commission. Where there was a half-secret commission, the question was then whether there had been informed consent by the principal. If there was informed consent then the agent was entitled to the commission. The authorities indicated that whether there had been informed consent would depend exactly what was disclosed and could be impacted by (i) how sophisticated the client was; and (ii) whether there was a market practice or custom about the way commissions are charged.

The Court of Appeal in Expert Tooling applied the existing law but seemed to move away from the idea that sophistication of the client or market practice should be relevant. The Court of Appeal found that there was a “half-secret" commission in Expert Tooling as the broker had disclosed the fact of the commission but not further details and also that no informed consent was obtained based on the lack of information provided to the client. The result of this is that there had been a breach of fiduciary duty by the broker. 

Liability of the payer of the commission

The distinction between half-secret or fully secret commissions was also potentially important when considering the liability of those who were paying the commission (in the insurance context, this is usually the insurer). In the Motor Finance cases, the claimants alleged that there was not proper disclosure by the car dealerships and that the lenders, as payer of the commission: (1) were liable in the tort of bribery and (2) had dishonestly assisted in a breach of fiduciary duty by the car dealers (by failing to disclose the commissions to the claimants). The Court of Appeal’s findings in Motor Finance included that half-secret commissions may not engage the tort of bribery but that the lenders were liable as an accessory to the breach of fiduciary duty which was found to have been owed by the car dealerships. 

In Expert Tooling the claimant alleged that Engie (as the payer of the commission) should be liable for assisting the breach of fiduciary duty by the broker. The Court of Appeal did not agree on the basis that no dishonesty by Engie was alleged in the proceedings, which was a requirement for dishonest assistance.  

The Supreme Court’s decision in Motor Finance

The Supreme Court has now put an end to the legal distinction between half-secret and fully secret commissions and confirmed that, where there is a fiduciary relationship, the fiduciary must disclose “all material facts” to the client. Absent such disclosure there will be a breach of fiduciary duty. The Judgment provides a helpful summary of the previous authorities considering what might amount to disclosure of all “material facts” although confirms this will be a case by case analysis. The Judgment states:

“In order to negative such a breach, what is required is full disclosure of all material facts, as authorities from Imperial Mercantile to FHR have repeatedly made clear. Partial disclosure has never been enough, as Tuckey LJ recognised in dealing with the question of equitable relief. That is not to say that disclosure of every fact is needed: as Imperial Mercantile and Anangel illustrate, what amount to material facts will depend on the circumstances of the particular case.” [226]

Ultimately, disclosure was not required in the case of the car dealerships as they were held not to owe fiduciary duties to the customers. 

In respect of the liability of the lenders the Supreme Court found that the lenders could not be liable in the tort of bribery given the conclusion that the car dealers did not owe the customers a fiduciary duty of loyalty. As a result, the Supreme Court declined to opine on what would be required to meet the test of dishonesty for the purposes of dishonest assistance.

See a detailed analysis of the Supreme Court’s Judgment here.

Order of the Supreme Court in Expert Tooling

By the time of the Motor Finance decision, there was an outstanding appeal by the claimant (Expert Tooling) to the Supreme Court in respect of the issue of whether the Court of Appeal was wrong to distinguish between fully and half secret commissions. There was no appeal in respect of whether adequate disclosures had been made – it was accepted by the parties that it had not. 

Following the decision in Motor Finance, the parties agreed that the appeal to be determined by the Supreme Court was no longer in issue (having been decided by Motor Finance) and so the Supreme Court allowed the appeal and entered judgment for Expert Tooling, confirming liability of Engie (as payer of commission) for the full amount of the secret commissions paid to the broker. 

Discussion

So what does this mean for insurance brokers in respect of disclosure of their commissions and also for insurers as payers of the commissions? What is clear is that there is no longer the concept of a “half-secret” commission. In other words, the disclosures are either sufficient or they are not and, if they are not, the broker will be in breach of their fiduciary duty and liable to account to the client.

The Supreme Court has confirmed that, where a fiduciary duty does exist, and disclosure is inadequate, the commission payment will amount to a bribe, a strict liability. Insurers are increasingly concerned about their potential exposure for bribes and/or as accessories to breaches of fiduciary duty and may seek confirmation that brokers are making adequate disclosures to their clients.

Standing back, Motor Finance may not have changed the practical position very much. The previous consideration was whether disclosures were enough for the client to provide “informed consent” and this was judged on a case-by-case basis; the position now is a requirement for disclosure of “all material facts” which will also be judged on a case-by-case basis.  In other words, there is no specific answer but it seems to us from the recent decisions that expectations around transparency by brokers have shifted and the decisions signal the courts’ move away from factors that have so far been considered as important in establishing informed consent such as the sophistication of the client or accepted market practice. 

Disclosure Requirements and Regulatory Context

Brokers should not forget their regulatory obligations when considering adequacy of disclosures (or, indeed, rely solely on the regulatory requirements when considering disclosures). From a regulatory perspective, the FCA's Insurance Conduct of Business Sourcebook (ICOBS) has not changed and sets out the core requirements in relation to the disclosure of broker remuneration, in particular ICOBS 4.3 and 4.4.  In summary, an intermediary must in good time before the initial conclusion of an insurance contract, and, if necessary, on its amendment or renewal, provide the customer with information on: (a) the nature of the remuneration received; and (b) whether the remuneration is by way of fee, commission, other type of remuneration including economic benefit of any kind or combination thereof (see ICOBS 4.3.-7). In addition, the source of the remuneration must be disclosed (ICOBS 4.3.-4).

In addition, brokers will be subject to obligations to manage conflicts of interests pursuant to PRIN 8 and SYSC 10.  

Concluding remarks

As will be seen from the above, there is no clear dicta from the authorities as to exactly what must be disclosed in order to meet the threshold of disclosure of “all material facts” and this will be assessed on the facts in each case. An unhelpful, but not unusual position, for insurance brokers (and their E&O insurers) to find themselves in.

If insurance brokers require specific advice in respect of their disclosures please do get in touch.