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Close Brothers sees 'material increase' to existing motor finance provisions
(Sharecast News) - Close Brothers shares tanked on Thursday as it warned that the Financial Conduct Authority's motor finance redress scheme would result in a "material increase" to its existing provision of £165m. Earlier this week, the FCA ruled that lenders would have to pay out £11bn including costs in compensation after finding "widespread failings" in how motor finance firms disclosed commission payments and commercial ties between lenders and brokers on agreements signed between 6 April 2007 and 1 November 2024.
Close Brothers said in a brief statement that while uncertainty about the outcome of the consultation remains, the initial assessment is that if implemented in its current form, the scheme would result in a material increase to its existing provision.
"This remains subject to ongoing review of the proposal and analysis of its potential impact on the group," it said.
Close Brothers added that it remains confident in its capital strength, with a Common Equity Tier 1 ratio of 13.8% at the end of July, significantly above its applicable requirement of 9.7%.
At 1225 BST, the shares were down 9.6% at 473.60p.
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