REG - Secure Trust BankPLC - FCA Consultation on Motor Finance Redress

Secure Trust BankAnnouncement

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RNS Number : 9969D  Secure Trust Bank PLC  20 October 2025

Secure Trust Bank PLC

20 October 2025

For immediate release

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

SECURE TRUST BANK PLC

FCA Consultation on Motor Finance Redress

Headlines:

 

·      FCA consultation paper on its proposed redress scheme is towards
the extreme end of outcomes previously expected from the Supreme Court
judgment

·      STB expects to increase its motor finance redress commission
provision by approximately £16 million(1) to a total of £21 million(1)

 

Secure Trust Bank PLC ("STB" or the "Group"), a leading specialist lender,
announced on 9 October 2025 it was assessing the implications of the FCA's
recent consultation paper on an industry-wide compensation scheme in respect
of motor finance commissions and has now undertaken its initial assessment.
The current FCA proposal is subject to consultation, and the final rules of
the redress scheme may change following review and feedback from stakeholders
and any legal challenge to the FCA proposals.

STB's existing provision as at 30(th) June 2025 of £5.5 million was based on
its own probability weighted assessment of how the FCA would apply the various
factors identified by the Supreme Court. The FCA consultation paper provides
further detail on its proposed redress approach, including significantly
broadening the scope of the overall redress scheme, how unfairness would be
assessed, time bar and proposed redress methodology.  Based on the FCA
proposals in their current form, the potential impact is towards the extreme
end of the range of previously expected outcomes.

As these proposals are subject to consultation and therefore remain uncertain,
STB has updated its range of probability weighted scenarios, including a high
probability of the FCA scheme being implemented as proposed. STB expects to
increase its provision for motor finance consumer redress and related costs by
£16 million(1) to £21 million(1), comprising £16 million(1) redress and £5
million(1) costs. If the FCA scheme was implemented entirely in its current
form, the Group would expect to increase the provision for redress by a
further £6 million(1).

On a pro forma basis, as at 30 September 2025 STB had a Common Equity Tier 1
("CET1") ratio of 13.3%(1).  STB estimates that the additional expected
provision of £16 million(1) will reduce CET1 ratio by c. 50 basis points to
12.8%(1), significantly above the Group's regulatory requirement of 9.6%. STB
has been capital accretive through the year and expects to continue to be
capital accretive in Q4 2025, on an underlying basis.

STB remains committed to ensuring customers receive appropriate redress where
there has been customer harm. However, it considers that the FCA's proposed
approach to assessing unfairness is not aligned with the Supreme Court
judgment in Johnson v FirstRand, where the test for unfairness is highly fact
specific and must take into account all relevant factors.

STB did not have commercial ties in the form of contractual rights of
exclusivity or first refusal to provide vehicle finance. STB made limited use
of discretionary commission arrangements ("DCAs") and, where it did so,
believes that it did so as a means of reducing its rates in competition with
other lenders to provide its customers with competitive finance, and not to
harm them. STB ceased using DCAs in June 2017, well ahead of their ban in
2021. STB will continue to engage constructively with the FCA and others on
these and additional points.

As there remains uncertainty on the final rules of the redress scheme, the
ultimate cost to STB could vary from its estimated provision.

Capital markets event

STB had previously indicated that it intended to hold a capital markets event
in Q4 2025.  Given the FCA's consultation timetable and the anticipated date
of publication of the final redress scheme, STB is moving this event, which
will focus on the Group's forward strategy, to Q1 2026.   Further
information will be provided in due course.

Footnotes

1.     Figures are unaudited and remain subject to review as part of STB's
full-year audit processes.

 

Enquiries:

Secure Trust Bank PLC

Ian Corfield, Chief Executive Officer

Rachel Lawrence, Chief Financial Officer

Phil Deakin, Strategy and Corporate Development Director

Tel: 0121 693 9100

 

Investec Bank plc (Joint Broker)

Christopher Baird

David Anderson

Maria Gomez de Olea

Tel: +44 (0) 20 7597 5970

 

Shore Capital Stockbrokers (Joint Broker)

Mark Percy / Sophie Collins (Corporate Advisory)

Guy Wiehahn / Oliver Jackson (Corporate
Broking)

Tel: +44 (0) 20 7408 4090

Camarco

Geoffrey Pelham-Lane, Amrith Uppuluri

securetrustbank@camarco.co.uk (mailto:securetrustbank@camarco.co.uk)

Tel: +44 (0) 7733 124 226, +44 (0) 7763 083 058

 

The person responsible for releasing this announcement is Lisa Daniels, Group
Company Secretary.

 

Forward looking statements

This announcement contains forward-looking statements about the business,
strategy and plans of STB and its current objectives, targets and expectations
relating to its future financial condition and performance. Statements that
are not historical facts, including statements about STB's or management's
beliefs and expectations, are forward-looking statements. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future. STB's actual
future results may differ materially from the results expressed or implied in
these forward-looking statements as a result of a variety of factors. These
include economic and business conditions, risks from failure of clients,
customers and counterparties, market related risks including interest rate
risk, risks regarding market conditions outside STB's control, expected credit
losses in certain scenarios involving forward looking data, operational risks,
legal, regulatory, or governmental developments, and other factors. The
forward-looking statements contained in this announcement are made as of the
date of this announcement, and (except as required by law or regulation) STB
undertakes no obligation to update any of its forward-looking statements.

About STB

STB is an established, well‐funded and capitalised UK retail bank with a
72-year trading track record. Secure Trust Bank operates principally from its
head office in Solihull, West Midlands.    STB 's diversified lending
portfolio focuses on two core sectors:

(i)            Business Finance through its Real Estate Finance and
Commercial Finance divisions; and

(ii)           Consumer Finance through its V12 Retail Finance
division.

Secure Trust Bank PLC is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation
Authority.

Secure Trust Bank PLC, Yorke House, Arleston Way, Solihull, B90 4LH.

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