REG - Close Brothers Fin. - Judgment in Respect of Hopcraft Case

Close BrothersAnnouncement

25/10/2024 12:45

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RNS Number : 7082J  Close Brothers Finance PLC  25 October 2024

 

This announcement contains inside information

Press Release
 

 Close Brothers Group plc and Close Brothers Finance plc
 25 October 2024

JUDGMENT IN RESPECT OF THE "HOPCRAFT" CASE

Close Brothers Group plc ("Close Brothers" or "the Group") notes the
publication of the judgment in respect of the "Hopcraft" case, upholding the
claimant's appeal against Close Brothers Limited ("CBL"). The case, which was
initially determined in CBL's favour, was heard in early July 2024 by the
Court of Appeal ("the Court") together with two separate claims made against
another lender.

Close Brothers disagrees with the Court's extension of the existing case law
in this area and intends to appeal this decision to the UK Supreme Court.

The Court has determined that motor dealers acting as credit brokers owe both
a disinterested duty and a duty of loyalty ("fiduciary duty") to their
customers. This sets a higher bar for the disclosure of and consent to the
existence, nature, and quantum of any commission paid than that required by
current FCA rules, or regulatory requirements in force at the time of the case
in question.

The financial impact of the Hopcraft case in isolation is not material to the
Group. However, subject to the appeal to the UK Supreme Court, the judgment
may set a precedent for similar claims, which may (depending on the specific
facts of those cases) result in significant liabilities for the Group. The
range of outcomes in these circumstances is currently uncertain, and the
overall cost to the Group will depend on, amongst other factors, the
application of the Court's ruling, the number of claims received, the facts
and circumstances of each individual claim, and the level of compensation, if
any, granted by the Court in each case. It is therefore currently not possible
to assess the timing, scope or quantum of any potential financial impact on
the Group.

While the judgment is likely to extend the current period of uncertainty for
the Group, we will continue to focus on supporting our customers and
protecting our valuable business franchise. The Group is in a strong financial
position, with a CET1 capital ratio of 12.8% as at 31 July 2024. As announced
in our Full Year 2024 Results, the Group already has a number of actions in
progress to further strengthen its capital position, including the agreed sale
of Close Brothers Asset Management which is expected to increase the group's
CET1 capital ratio by approximately 100 basis points. Our conservative
approach to funding is based on the principle of "borrow long, lend short" and
we hold liquidity levels comfortably ahead of both internal risk appetite and
regulatory requirements, with a 12-month average Liquidity Coverage Ratio in
excess of 1,000% as at 31 July 2024.

We will be temporarily pausing the writing of new UK motor finance business
while we review and implement any relevant changes to our documentation and
processes to ensure compliance with these new requirements.

Inside information

This announcement contains information which is deemed by the Company to
constitute inside information within the meaning of the UK version of the
European Union's Market Abuse Regulation ((EU) No. 596/2014). Upon the
publication of this announcement via the Regulatory Information Service, the
inside information is now considered to be in the public domain. The person
responsible for arranging the release of this information on behalf of the
Company is Sarah Peazer-Davies, Company Secretary.

 

Enquiries

Sophie Gillingham
Close Brothers Group
plc                              07525 732 025

Camila
Sugimura                                 Close
Brothers Group plc
07703 886 948

Neil
Bennett
H/Advisors
Maitland
07900 000 777

Sam
Cartwright
H/Advisors
Maitland
07827 254 561

 

About Close Brothers

Close Brothers is a leading UK merchant banking group providing lending,
deposit taking, wealth management services and securities trading.  We employ
approximately 4,000 people, principally in the United Kingdom and Ireland.
Close Brothers Group plc is listed on the London Stock Exchange and is a
constituent of the FTSE 250.

 

Cautionary Statement

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".
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
announcement 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.

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