9:43 am, May 21, 2026
Close Brothers has increased its provision for motor finance commission compensation to an eye-watering £320m.
The lender has this morning (May 21) published a trading update via the London Stock Exchange, in which it revealed that it had set aside an additional £30m charge during Q3.
The move was made in response to the FCA finally publishing the details of its redress scheme, earlier this year.
The scheme is currently subject to a legal challenge from firms including Mercedes-Benz and VW but Close Brothers said the proposals offer a ‘quick, clear and certain route to resolving this matter for all relevant parties’.
Despite this, bosses admitted the firm continues to disagree with elements of the scheme, in comments similar to those from the Finance and Leasing Association last month.
In the trading update, Close Brothers said: ‘While there are elements of the scheme that we disagree with, we continue to believe that the existing scheme offers a quick, clear and certain route to resolving this matter for all relevant parties.
‘However, the ultimate cost to the group remains subject to the outcome of the legal challenges to the scheme and any further legal, regulatory or industry developments including court claims and complaints from consumers.’
Elsewhere, despite the growing financial hit from the motor finance crisis, Close Brothers reported a ‘solid performance’ in Q3.
The firm said its lending divisions delivered a ‘resilient’ third quarter, with the loan book growing 1% to £9.3bn.
The group maintained a robust net interest margin of 7.0% and stable credit quality, with the bad debt ratio holding at 0.8%.
Meanwhile, the firm also accelerating cost-cutting measures, which are expected to deliver savings of more than £25m by the end of the year.
Bosses now say the outfit remains on track to meet full-year guidance.
Chief executive Mike Morgan said: ‘We have delivered a solid performance in the third quarter and continue to execute our strategy through this important transitional year.
‘We are progressing well with the delivery of our strategic objectives and targets. Our capital position remains strong after absorbing the additional provision for motor finance commissions, enabling investment in future growth to further support the UK economy.’
