BVRLA urged to clarify impact of Court ruling on large and medium-sized corporate leasing clients

A request for BVRLA clarification by Paul Fagan, CEO of WeVee

FOLLOWING the recent Court of Appeal judgment in Johnson v Firstrand Bank and Hopcroft v Close Brothers, the leasing industry is grappling with potential new compliance obligations. Although the ruling clearly intends to protect individual consumers, there is growing concern about unintended confusion regarding its application to corporate clients – particularly large and medium-sized businesses.

Paul Fagan, Founder and CEO of WeVee and a leasing industry veteran with over 25 years of experience, has formally contacted the BVRLA, requesting clarification on the judgment’s applicability to corporate clients. Fagan, a former BVRLA Leasing Broker Committee member, believes the judgment’s focus on “sophisticated” and “unsophisticated” consumers affirms its intent to cover individuals rather than companies with dedicated financial resources and sophisticated legal teams.

WeVee, partnered with leading FN50 leasing companies, exclusively serves mid-sized and large corporate entities through its EcoMute salary sacrifice programme. “Large and medium-sized corporates are fully capable of negotiating complex agreements, typically with in-house procurement and finance teams and legal resources at their disposal,” Fagan explained. “The consumer protections referenced in the judgment don’t align with the needs of these corporate clients who don’t rely on the same safeguards that an individual consumer might.”

Industry-wide rally for clarity in leasing sector

Other prominent voices in the leasing industry are rallying in support of this call for clarification, underscoring the critical need to distinguish between consumer and corporate leasing clients. Rod Lloyd, Chair of the BVRLA Leasing Broker Committee, shared that he has been hearing from numerous leasing brokers who are deeply concerned by the impact of the judgment. Lloyd reports that many brokers view the judgment as an existential threat, with some operations in the sector coming to a near standstill as leasing brokers grapple with the implications. Lloyd, like Fagan, believes that consumer-focused regulations should not unduly restrict corporate leasing arrangements and is pressing for a solution that allows B2B leasing to proceed without unnecessary constraints.

Martin Brown, Managing Director of Fleet Alliance, also voiced his support, highlighting that the misapplication of consumer finance standards to the corporate leasing sector would unduly disrupt business operations. Brown’s recent comments stressed the need to draw clear lines between regulated consumer finance and the non-regulated corporate market, noting that consumer standards could create new barriers for businesses with the expertise and resources to make informed financial decisions independently.

Impact of consumer vs customer terminology

One key area of concern is the BVRLA’s use of the term “customer” instead of “consumer” in its recent FAQ document on the judgment, prepared with Norton Rose Fulbright. While this document aims to provide general guidance, WeVee believes further clarification is essential, especially given its implications for brokers and leasing companies in the B2B market.

Fagan explains that clear guidance is needed to ensure leasing brokers, manufacturers, and other industry stakeholders understand that these consumer protections are not intended to apply to larger businesses. Using the catch-all term “customer” in the BVRLA publication blurs this line, leading to overly cautious or restrictive interpretations that may impact B2B leasing transactions.

Clarifying the duties referenced in the judgment

Another focal point is the mention of both the disinterested duty and fiduciary duty in the judgment. In WeVee’s formal communication to the BVRLA, Fagan noted that these duties, which require brokers to act impartially and in the consumer’s best interest, are relevant primarily to individual consumers who may rely on brokers for fair representation. Medium and large companies, in contrast, don’t typically require this level of duty due to their inherent financial and legal sophistication.

WeVee’s call for clarity to help the industry move forward

Fagan emphasises that, given the leasing sector’s substantial contribution to the UK economy – an industry worth £49 billion annually, according to the BVRLA – leasing industry members need clarity to continue their operations smoothly. With FN50 leasing companies managing nearly 1.8 million vehicles, this sector drives significant economic activity, supporting jobs, tax revenues, and vital sustainability goals across the UK.

Fagan has requested the BVRLA to confirm explicitly that the judgment’s obligations and duties do not apply to medium and large companies, allowing leasing brokers to proceed confidently without unnecessary restrictions on corporate clients.

“With so much focus on emissions reduction and the push to electrify UK fleets, we can’t afford for corporates to get caught up in consumer-focused rulings that aren’t intended for them,” said Fagan. “This clarification would provide the guidance we need to serve our B2B clients effectively, without the unintended regulatory constraints.”

Conclusion

The BVRLA has been working closely with its members to address concerns since the judgment, but as leasing brokers and financial service providers call for clarity, there’s a strong industry need to confirm which types of clients fall under these protections. For large and medium-sized corporate clients, clear guidance would mean business as usual – and help the industry stay focused on delivering low-emission and EV leasing solutions to the corporate sector.

Shashi Maharaj, BVRLA Legal and Membership Director, responds to Paul Fagan’s comments

“The impact of the Court of Appeal ruling is broad and the use of the term ‘customer’ was an intentional decision by Norton Rose Fulbright in preparing the legal opinion procured by the BVRLA. We have worked quickly but intensively to provide as much clarity as possible to date but are aware that questions remain and differences of interpretation are inevitable. Our FAQ document addresses some questions around sophistication, which is a more fundamental aspect of the ruling other than if dealing with an individual or a corporate client.

“The BVRLA is working with regulators, government, members and industry stakeholders to provide legal clarification and operational support. We are determined to improve lines of communication and compliant collaboration across the industry and keep the essential gears of motor finance moving.

“We are also formally supporting legal efforts to obtain a Supreme Court review of this ruling to deliver a swift resolution to the damaging uncertainty the Court of Appeal judgement has created.”