REG - Close Brothers Fin. - Further Announcement - "Hopcraft" Judgment

Close BrothersAnnouncement

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RNS Number : 7289T  Close Brothers Finance PLC  04 August 2025

Close Brothers Group plc and Close Brothers Finance plc

2 August 2025

SUPREME COURT JUDGMENT IN RESPECT OF THE "HOPCRAFT" CASE

On 11 December 2024, Close Brothers Limited ("CBL") obtained permission from
the Supreme Court of England and Wales (the "Supreme Court") to appeal the
Court of Appeal's judgment against CBL in respect of the "Hopcraft" motor
finance commissions case (the "Appeal").

The Appeal was heard by the Supreme Court between 1 April 2025 and 3 April
2025.

On 1 August 2025, the Supreme Court gave its judgment, 1  (#_ftn1) in which
CBL successfully overturned the Court of Appeal's judgment in respect of the
"Hopcraft" case. The Supreme Court has determined that motor dealers (acting
as a credit broker) do not owe fiduciary duties to their customers. As a
result, the Supreme Court dismissed the Hopcrafts' claims against CBL
entirely. The Supreme Court reached the same conclusion on these issues in
relation to the "Wrench" and "Johnson" cases against FirstRand Bank Limited
("FirstRand").

On the issue in "Johnson" relating to unfairness under s.140A of the Consumer
Credit Act 1974 ("CCA"), the Supreme Court made clear that the test for
unfairness is highly fact sensitive and takes into account a broad range of
factors. On the facts of Johnson, the Supreme Court upheld the Court of
Appeal's decision that the relationship between Mr Johnson and FirstRand was
unfair and required FirstRand to pay Mr Johnson the value of the commission
paid to the dealer plus compensatory interest at an appropriate commercial
rate.

Close Brothers Group plc ("the group" or "Close Brothers") welcomes the
outcome of the Appeal, which provides clarity on important legal and
commercial principles. Following the publication of the Supreme Court's
judgment, the Financial Conduct Authority (the "FCA") announced that it will
confirm whether it will consult on a redress scheme pursuant to its current
review of motor finance commissions, before markets open on 4 August 2025.
Until the FCA confirms whether it will consult on a redress scheme and, if so,
confirms the design and scope of that scheme, there remains uncertainty as to
the range of outcomes, and the financial impact to the group, including any
impact on its provisioning assessment. In parallel, Close Brothers is
continuing to assess the impact of the principles set out in the Supreme
Court's judgment on its motor finance loan portfolio.

In the meantime, Close Brothers continues to focus on maintaining our strong
client franchise by serving our customers, delivering excellent service,
providing specialist expertise and building strong, lasting relationships. We
have strengthened our capital position and maintained high levels of
liquidity, substantially above regulatory requirements. The group's Common
Equity Tier 1 ("CET1") capital ratio was 14.0% 2  (#_ftn2) at 30 April 2025,
reflecting significant progress on our capital actions. This already includes
the impact of a £165 million provision in relation to motor finance
commissions. In addition, the recently announced sale of Winterflood
Securities is expected to increase the group's CET1 capital ratio by c.30
basis points, from 14.0% to c.14.3%, on a pro-forma basis upon completion,
with further CET1 capital benefits of up to c.25 basis points expected from a
reduction in operational risk weighted assets in due course 3  (#_ftn3) .
Underlying financial performance has remained robust with Adjusted Operating
Profit of £75 million reported in the first half of the financial year and a
continued resilient performance in Q3, as set out in our trading update on 21
May 2025. We continue to review our businesses and portfolios in line with our
strategy set out at the half year results in March 2025.

The group will make any further announcements as and when appropriate.

Enquiries

 Sophie Gillingham  Close Brothers Group plc  020 3857 6574
 Camila Sugimura    Close Brothers Group plc  020 3857 6577
 Sam Cartwright     H/Advisors Maitland       07827 254 561

About Close Brothers

Close Brothers is a leading UK merchant banking group providing lending,
deposit taking and securities trading. We employ approximately 3,000 people,
principally in the United Kingdom and Ireland. Close Brothers is listed on the
London Stock Exchange and is a constituent of the FTSE 250.

Important Notices

Certain statements included or incorporated by reference within this
announcement may constitute "forward-looking statements" in respect of the
group's operations, performance, prospects and/or financial condition. All
statements other than statements of historical fact are, or may be deemed to
be, forward-looking statements. Forward-looking statements are sometimes, but
not always, identified by their use of a date in the future or such words as
"anticipates", "aims", "due", "could", "may", "will", "should", "expects",
"believes", "intends", "plans", "potential", "targets", "goal" or "estimates"
and other words and expressions of similar meaning. By their nature,
forward-looking statements involve a number of risks, uncertainties and
assumptions and actual results or events may differ materially from those
expressed or implied by those statements. There are also a number of factors
that could cause actual future operations, performance, financial conditions,
results or developments to differ materially from the plans, goals and
expectations expressed or implied by these forward-looking statements and
forecasts. These factors include, but are not limited to, those contained in
the group's annual report (available at:
https://www.closebrothers.com/investor-relations
(https://www.closebrothers.com/investor-relations) ). Accordingly, no
assurance can be given that any particular expectation will be met and
reliance should not be placed on any forward-looking statement. Additionally,
forward-looking statements regarding past trends or activities should not be
taken as a representation that such trends or activities will continue in the
future.

Except as may be required by law or regulation, no responsibility or
obligation is accepted to update or revise any forward-looking statement
resulting from new information, future events or otherwise. Nothing in this
document should be construed as a profit forecast. Past performance cannot be
relied upon as a guide to future performance and persons needing advice should
consult an independent financial adviser.

This announcement does not constitute or form part of any offer or invitation
to sell, or any solicitation of any offer to subscribe for or purchase any
shares or other securities in the company or any of its group members, nor
shall it or any part of it or the fact of its distribution form the basis of,
or be relied on in connection with, any contract or commitment or investment
decisions relating thereto, nor does it constitute a recommendation regarding
the shares or other securities of the company or any of its group members.
Statements in this announcement reflect the knowledge and information
available at the time of its preparation. Liability arising from anything in
this announcement shall be governed by English law. Nothing in this
announcement shall exclude any liability under applicable laws that cannot be
excluded in accordance with such laws.

 1   The judgment is available on the case page
here: www.supremecourt.uk/cases/uksc-2024-0157
(http://www.supremecourt.uk/cases/uksc-2024-0157) .

 2  CET1 capital ratio reflects the estimated benefit of c.145 basis points in
relation to the sale of Close Brothers Asset Management, which completed on 28
February 2025, and includes the impact of a £165 million provision related to
motor finance commissions.

 3  The sale of Winterflood Securities to Marex Group plc was announced on 25
July 2025 and is expected to complete in early 2026, subject to customary
regulatory approvals. The estimated CET1 capital ratio benefit is based on
financials at 30 April 2025 on a pro-forma basis. The group expects further
CET1 capital ratio benefits of up to c.25 basis points from a reduction in
operational risk RWAs currently associated with Winterflood in due course.

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