{"id":39545,"title":"Close Brothers Sets Aside £165 Million Pounds Over Car Finance Scandal","publisher":"Stockmark.IT","author":"Stockmark.IT Website","published":"2025-02-13T05:49:16+00:00","modified":"2025-02-13T05:49:16+00:00","canonical_url":"https://stockmark.it/close-brothers-sets-aside-165-million-pounds-over-car-finance-scandal/","markdown_url":"https://stockmark.it/close-brothers-sets-aside-165-million-pounds-over-car-finance-scandal.md","json_url":"https://stockmark.it/close-brothers-sets-aside-165-million-pounds-over-car-finance-scandal.json","category":"Banking","categories":["Banking","Cars","Financial"],"featured_image":"https://i0.wp.com/stockmark.it/wp-content/uploads/stencil.stockmark-it-12-2.jpg?fit=1200%2C800&quality=89&ssl=1","format":"news","language":"en-GB","content":"The FTSE 250 lender Close Brothers has announced it will set aside up to £165 million in its first half to address potential legal and compensation costs amid the growing car loans commission scandal. The unscheduled update revealed the estimate follows a comprehensive assessment, though the company acknowledges significant uncertainty surrounding court appeals and the Financial Conduct Authority’s ongoing review.\n\nThe provision marks a pivotal moment in the unfolding crisis facing the motor finance industry. Major lenders could face billions in compensation over motor finance deals involving undisclosed commission payments. Industry giants Lloyds Banking Group previously allocated £450 million through its Black Horse business, while Santander UK established a £295 million provision.\n\nBanking analysts suggest Close Brothers’ provision indicates a potential £1.3 billion cost for Lloyds, which is scheduled to release full-year results next week. The announcement impacted share prices, with Close Brothers falling 6.4 per cent to 341¾p, while Lloyds experienced a modest gain of 1.75 per cent.\n\nThe October Court of Appeal ruling declared it unlawful for car dealers to receive undisclosed commission from lenders, potentially triggering a wave of mis-selling complaints. The Treasury’s recent intervention, seeking to present evidence to the Supreme Court, has offered hope to the industry. Close Brothers, while disagreeing with the ruling, has strengthened its capital position through strategic moves, including the £200 million sale of its wealth management division.\n\nThe company’s adjusted operating profit is expected to decrease to £75 million from £94.4 million year-on-year. Industry experts at Jefferies characterise the provision as “perhaps comforting” for Lloyds but caution that outcomes could vary significantly based on undisclosed scenarios.\n\n|||"}