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REG - Close Bros Grp PLC - Further update in relation to Motor Commissions

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RNS Number : 1928D  Close Brothers Group PLC  14 October 2025

 

This announcement contains inside information
 

 Further update in relation to motor finance commissions
 14 October 2025

Following the publication of the Financial Conduct Authority ("FCA")'s
consultation paper on 7 October 2025 on a proposed industry-wide redress
scheme in respect of motor finance commissions, Close Brothers Group plc ("the
group") has carried out a review of the potential financial impact of the
proposed scheme.

The group's existing provision of £165.0 million was based on a range of
probability-weighted redress scenarios. The FCA consultation provides more
detail on the proposed redress scheme, including the commission models that
would be in scope, how unfairness would be assessed, and the proposed approach
to calculation of redress. The proposals indicate that the potential financial
impact would sit towards the higher end of the group's previous scenarios.

While uncertainty in relation to the outcome of the consultation remains, the
group has updated its range of probability-weighted scenarios resulting in an
additional expected charge of around £135 million, increasing the total
provision to approximately £300 million. This reflects a greater likelihood
that more historical cases, particularly those involving Discretionary
Commission Arrangements, would qualify for redress, as well as the possibility
of the proposed redress methodology resulting in higher compensation levels
than reflected in some of the group's previous range of scenarios.

The group is committed to achieving a fair outcome for customers and providing
redress where loss has occurred. However, it does not believe the redress
methodology proposed by the FCA appropriately reflects actual customer loss or
achieves a proportionate outcome. In addition, the FCA's proposed approach to
assessing unfairness does not align with the legal clarity provided by the
Supreme Court judgement in respect of the "Johnson" case, which confirmed that
the test for unfairness is highly fact specific and must take into account a
broad range of factors. The group will continue to engage with the FCA in
respect of these points.

The total c.£300 million provision, which includes both redress and certain
operational costs, represents the group's current best estimate based on all
available information at this stage. The ultimate cost to the group could be
materially higher or lower than the estimated provision depending on the
outcome of the consultation and any further legal, regulatory or industry
developments.

The group remains confident in its capital strength, with a Common Equity Tier
1 ("CET1") ratio of 13.8% (14.3% reflecting the disposal of Winterflood(1)) as
at 31 July 2025. The additional provision is expected to reduce the CET1
capital ratio by approximately 130 basis points on a pro-forma basis as at 31
July 2025(2). Taking into account the estimated CET1 benefit from the sale of
Winterflood of c.55 basis points alongside the impact of the estimated
provision, the pro-forma CET1 capital ratio would be c.13.0%, significantly
above the group's regulatory requirement of 9.7%.

 

 

 

Footnotes

1 Reflecting the estimated CET1 benefit from the sale of Winterflood. The
announced sale of Winterflood is expected to increase the group's CET1 capital
ratio by c.55 basis points on a pro-forma basis as at 31 July 2025, of which
c.30 basis points will be recognised upon completion, with a further c.25
basis points expected in due course from the reduction in operational risk
weighted assets.

2 The estimated financial impact included in this announcement is unaudited
and remains subject to review as part of the group's interim and full-year
audit processes.

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, Group General Counsel and Company Secretary.

Enquiries

Camila
Sugimura                                 Close
Brothers Group plc
020 3857 6577

Sam
Cartwright
H/Advisors
Maitland
07827 254561

 

About Close Brothers

Close Brothers is a UK specialist banking group providing lending, deposit
taking and securities trading. We employ approximately 3,000 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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