<\/p>\n
Close Brothers Group said it\u2019s adequately covered against the estimated cost related to the misselling of car loans, marking a boost for the London-listed firm after short-seller Viceroy Research claimed its provisions for compensation were too small.<\/p>\n
The specialised lender said in a Wednesday statement that the Financial Conduct Authority\u2019s latest guidance suggests it will face a cost of \u00a3320 million ($430 million) related to compensating customers who were mis sold car loans. That\u2019s \u201cbroadly similar\u201d to the \u00a3294 million provision it detailed at the end of January, which is under review.<\/p>\n
Close Brothers shares gained as much as 23% as of 9 am London time on Wednesday.<\/p>\n
ADVERTISEMENT<\/p>\n
CONTINUE READING BELOW<\/p>\n
While \u201cno provision changes have been recognised,\u201d the \u00a3320 million estimate \u201ccan be comfortably absorbed by existing capital resources,\u201d according to the statement.<\/p>\n
Its analysis comes after the FCA last week narrowed the scope of its motor finance redress plan. Around 12.1 million loans will be eligible across the UK, down from 14.2 million under a previous iteration. The program is set to cost the industry \u00a39.1 billion overall, down from \u00a311 billion in the previous version, but could still face legal challenges.<\/p>\n
Close Brothers is viewed as one of the firms most exposed to the motor finance scandal. Banks and car manufacturers have set aside billions of pounds to compensate consumers who unwittingly paid commission when they purchased cars. Claimants are set to be repaid an average of \u00a3829, according to the FCA\u2019s final compensation plan.<\/p>\n
The FCA has called on banks to move forward with its revised program rather than mount a legal challenge. Lloyds Banking Group Plc, which has disclosed the largest known provision at almost \u00a32 billion, has already said it isn\u2019t planning to set aside more money.<\/p>\n
ADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n
In contrast, South African lender FirstRand has vowed to exit the UK entirely by closing its motor finance business, while saying on Tuesday it reserved its legal rights.<\/p>\n
Other details on how the FCA\u2019s plan will impact Close Brothers:<\/p>\n
720,000 UK-regulated motor finance loans written between April 6, 2007 and November 1, 2024 qualify for redress
\nThe firm is expecting to give an average redress payment of \u00a3500 per customer, including compensatory interest, lower than the industry average of \u00a3829 quoted by the FCA
\nAverage payments expected to be lower because of Close Brothers\u2019 smaller loan sizes and lower commission levels
\nAn estimated claim rate of 75%, in line with the FCA\u2019s assumption
\nAn absolute increase or decrease of 5% in the assumed claim rate would adjust the estimate by \u00a318 million
\nAn estimated delivery cost of \u00a366 million,, excluding \u00a314 million of costs already incurred against the existing provision<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Close #Brothers #handle #costs #motor #finance #plan<\/p>\n","protected":false},"excerpt":{"rendered":"
Close Brothers Group said it\u2019s adequately covered against the estimated cost related to the misselling…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[3686,1419,1364,483,7561,2448,154],"_links":{"self":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/3371"}],"collection":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3371"}],"version-history":[{"count":0,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/3371\/revisions"}],"wp:attachment":[{"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3371"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3371"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3371"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}