9:20 am, December 12, 2024
A leading finance provider has admitted that the ongoing saga around commission payments is weighing heavy on business and consumer confidence, amid ‘chaotic’ market conditions.
S&U, which provides car finance through Advantage Finance, said trading conditions had been ‘burdened’ over the first half of its financial year.
In a trading statement posted via the London Stock Exchange, the company hit out at October’s landmark Court of Appeal ruling against Close Brothers and RandBank.
The outfit said that the decision ‘sought to impose a new, but retrospective, duty of care on lenders and brokers throughout the sector’.
It added that the ruling caused ‘chaotic market conditions’ and ‘a cock-shy of opportunistic claims by Claims Management Companies (CMCs) on social media’
The crisis contributed to a 33% drop in advances, meaning short-term credit, so far this year compared with last year.
In its update to investors, the company said: ‘Such a result is creditable given the plethora of sometimes conflicting regulatory messages in financial services over the recent past.
‘The uncertainty this creates inevitably erodes the relationship between lender and customer which Advantage has nurtured for over 25 years.
‘The Court of Appeal decision on the legality of commissions paid by lenders to intermediaries mentioned above is an example.
‘It introduced a shift in expectations that differed from previous regulatory guidance on the matter followed by Advantage and most of the industry.
‘The result has been a cock-shy of opportunistic claims by CMCs on social media which are disruptive and which in the case of regulatory compliant commission disclosures seek to allege a consumer harm which can reasonably be evidenced not to exist.
‘We remain confident that the introduction of a formal charging regime for CMCs legislated this year will deter spurious claims in future.’
Net receivables for Advantage Finance – meaning the amount of money owed to the lender that it expects customers to be able to pay – were £295m at the end of the period, a tenth lower than the prior year.
Nonetheless, S&U said it was lifted by a stronger financial performance for its property bridging finance arm Aspen Finance.
This was partly thanks to growing demand from smaller entrepreneurs to ‘fill the gap’ in the Government’s house building targets, which has created more bridging opportunities, it said.
