12:19 pm, April 8, 2026
Motonovo owner FirstRand Bank is to pull out of the UK in response to the FCA’s ‘disproportionate and unfair’ motor finance redress scheme.
The South African banking group has hit out at the scheme, announced by the UK’s financial watchdog last week, labelling the model ‘problematic’.
It now says it aims to withdraw from the UK market by selling its challenger bank, Aldermore – through which it owns Motonovo.
According to the FT, FirstRand coughed up £1.1bn to buy Aldermore in 2017, but has now decided it is no longer worth the risk.
The lender confirmed the news in a lengthy statement to the Johannesburg Stock Exchange, in which it also announced it was upping its provision to handling claims under the scheme.
The bank says it will take an additional £510m provision to pay all motorists who are entitled to compensation, bringing the total to £750m.
Bosses say the figure significantly exceeds the £275m total profits the bank has earned from the UK motor finance over a decade.
FirstRand says: ‘The group has now undertaken a comprehensive assessment of the [FCA] statement.
‘The legal teams and economic specialists that provided input to the FCA’s consultative process have also reviewed the Statement.
‘FirstRand acknowledges that whilst the FCA has made some changes to the scheme, that can be viewed as responses to issues raised by the group and other lenders during the consultative period, any mitigation arising from these changes has been more than offset by other amendments.
‘These amendments are problematic in that they result in a financial impact above the group’s expectations.
‘Therefore, FirstRand remains firmly of the view that for the group the final redress scheme proposed by the FCA is disproportionate and unfair.’
It added: ‘Whilst the group believes that Aldermore Bank is a resilient and sustainable business serving an important need in the UK market, with a management team that is executing on a sensible strategy to diversify asset classes and funding, extract greater operational leverage and improve the current ROE, the UK as a consumer finance jurisdiction will not deliver the returns the group requires.
‘Therefore, the business case for FirstRand to own and operate a UK consumer finance entity, particularly given its disciplined financial resource allocation principles, coupled with the legal and regulatory look-back risk, is not within the group’s risk appetite.
‘Cognisant of protecting shareholder value and ensuring Aldermore’s future success the group will work with the Aldermore board and respective regulators to facilitate an orderly ownership transition.’
The news was also confirmed in the UK, where Aldermore announced the decision in a filing to the London Stock Exchange.
In its own update, the bank said: The group is itself a wholly-owned subsidiary of FirstRand Group which today announced that following the analysis of the impact of the redress scheme, the business case for FirstRand to own and operate a UK consumer finance entity is outside of FirstRand’s risk appetite.
‘The Aldermore Board will work closely with FirstRand and respective regulators to ensure an orderly ownership transition that will support Aldermore’s growth ambitions going forward.
‘In the meantime, the Bank remains committed to its strategy to continue to drive significant positive outcomes for all of our stakeholders.’
FirstRand was one of two banks involved in the initial Court of Appeal hearing that sparked the crisis, along with Close Brothers.
Close Brothers today announced that it is sticking to its own provisions to handling the redress scheme, having put aside £320m to settle claims.
Aldermore now says that it has carried out a ‘preliminary assessment’ of the watchdog’s scheme and expects to increase its own provision from £73.1m to £280.0m.
