Close Brothers, a financial group, announced that it won’t pay dividends this year, saving around £100m. This decision aims to strengthen the company’s finances.
FCA Investigation:
The Financial Conduct Authority (FCA) is investigating past commission payments made to car dealers. These payments were banned in 2021, and the FCA is expected to provide an update later this year.
Martin Lewis’s Tool:
Consumer champion Martin Lewis created a tool to help people file complaints against lenders. Over 250,000 people have already used it. Lewis believes that claims related to “mis-sold motor finance” could be significant, similar to the PPI scandal.
Close Brothers’ Motor Finance:
Close Brothers provides various loans, with motor finance accounting for nearly a fifth of its lending portfolio at £1.95bn. The company acknowledges uncertainty surrounding the FCA’s review but remains confident in its business performance.
Analysts’ Perspectives:
Opinions among analysts vary. Shore Capital maintains a neutral stance, awaiting further clarity from the FCA. UBS analysts suggest Close Brothers’ liability could range from £30m to £830m, while RBC Capital estimates industry-wide potential bills between £6bn and £16bn. Lloyds, through its Black Horse Motoring Finance division, could face a £2bn impact.
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