Close Brothers has disclosed a provision of up to £165 million in the first-half accounts to cover potential legal and compensation costs related to the growing car finance commission scandal. The lender cautioned that final costs could vary dramatically, influenced by the outcomes of ongoing legal appeals and a review by the FCA. Noteworthy is the October Court of Appeal decision which deemed hidden commissions unlawful without customer consent, prompting a surge of consumer compensation claims. As the industry braces for potential outcomes, Close Brothers remains committed to maintaining a healthy financial position.
The car finance commission scandal has prompted many lenders, including Close Brothers, to allocate significant provisions to cover potential legal and compensation costs.
Close Brothers disclosed a provision of up to £165 million, warning that the ultimate costs related to legal appeals and FCA reviews could significantly fluctuate.
The Court of Appeal's ruling deemed car dealer commissions from lenders without customer consent unlawful, leading to anticipated compensation claims from consumers.
Despite the legal challenges, Close Brothers maintains adequate regulatory capital levels and is looking to optimize risk-weighted assets to mitigate exposure.
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