Long Read: Transparency
09/01/2026
Edmund Locock, Senior Associate, for Gateley Legal, writes: Transparency is something of a buzzword in asset finance these days, and for very good reason. The question, however, is not whether transparency is important (it is), but how much counts as too much.
Where do lessors draw the line on transparency, and illuminate a customer’s path without blinding them with too much information?
Non-Negotiables
Let’s start with what lessors must do.
For regulated consumer hire and credit agreements, the absolute baseline of transparency has always been much higher than in the unregulated sphere. For that, largely, we can thank the Consumer Credit Act 1974 (the CCA) and its associated regulations (including the catchily named Consumer Credit (Agreements) Regulations 1983 (SI 1983/1553)).
The CCA and its subordinate regulations dictate a large part of the information required to be set out in regulated credit and hire agreements, together with the order and form in which such information must be displayed. Ignore the regulations at your peril, because failure to comply will result in agreements being rendered unenforceable without a Court order (s55 CCA).
For unregulated credit and hire agreements however, which dwell in that misty area beyond the FCA’s regulatory perimeter, the CCA has no application. Legally, there are no statutory form and content requirements for such agreements. As with contracts generally, they do not strictly even need to be in writing.
That said, it is a requirement that contracts have certainty as to their terms. From a lessor’s perspective (trust me on this) it is vastly preferrable to have a complete and cast-iron set of terms and conditions upon which one can rely if an agreement goes wrong.
Expectation Shift
Recently, and driven in no small part by a certain motor finance commission claim, the legal and political environment around disclosure and transparency in asset finance and leasing has shifted dramatically.
Between increasing FCA scrutiny and activity, customer awareness (thanks somewhat to a pre-emptive deluge of CMC activity) and reputational tremors caused by the recent commission cases, the spotlight on how lessors disclose key information to customers (particularly around pricing and commissions) has brightened to a dazzling glare.
Many lessors chose from the outset – before the Supreme Court’s decision – to change their practices to include full disclosure of broker commissions whether operating in the regulated or unregulated, motor or asset, sectors. Whatever your views on the Supreme Court’s final decision it is unlikely that those changes, now made, will be undone.
Customers’ Capacity for Information
It was noted in the Court of Appeal’s judgment on Johnson -v- FirstRand (and re-iterated by the Supreme Court) that the customer “did not read” the terms and conditions. Noted, but not criticised by either Court and in fact relied upon as evidence that no commission had been disclosed (because it was “hidden in plain sight” amongst the terms and conditions).
Indeed, the Court of Appeal went so far as to note that “[Johnson] is hardly alone in dealing with complex legal documentation in this way” and “[the lender] can have had no real expectation that they would [read them]”.
The Court’s comments, albeit within a very specific context, seemingly fly against the established legal principle that an entity signing a contract is presumed to have read it first.
In a world where customers can (seemingly) successfully argue that they did not read and are unaware of information set out in a lessor’s terms and conditions, then the question becomes what else should funders be explicitly bringing into the spotlight?
The answer to that question will depend largely upon the sophistication of the customer in question. Non-business customers, within the regulated asset and motor finance sectors, will (naturally) require more transparency than sophisticated business users.
Taking the point to an extreme, one might start by producing - and requiring unsophisticated customers to sign - side-letters drawing their attention to key agreement clauses, such as (amongst other things): (i) time being of the essence, (ii) terminating events, (iii) termination sum calculations, and (iv) indemnity clauses.
But where does it end? Well-drafted asset finance agreements are tightly drafted.
Mr Johnson complained about being presented with “an enormous amount of paperwork”. Surely, therefore, it is in customers’ best interests to avoid burying them with mountains of paperwork covered in bold text and “Sign Here” stickers.
Taking a step back, most customers – particularly individuals – have absolutely no interest in reading and understanding the terms and conditions to which they are signing up. They want their money/asset, and they want it now.
The asset finance and leasing sector is increasingly concerned with transparency and disclosure, but there is a fine line between adequate transparency and blinding a customer with too much information.
Less, perhaps, can be more.
Author: Edmund Locock, Senior Associate for Gateley Legal
Note: this is a shortened and edited version of the article first published in issue 214 of Leasing World magazine.
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