8:01 am, November 21, 2024
Banking giant Santander has become the latest lender to put millions of pounds aside to pay potential compensation to victims of the motor finance scandal.
The firm says it has assigned an eye-watering £295m as a provision to cover potential payouts as well as legal costs relating to the crisis.
The announcement was made as part of Santander UK’s Q3 results, which were delayed as a result of last month’s Court of Appeal ruling against Close Brothers and MotoNovo owner FirstRand Bank.
In the documents, Santander bosses said there are ‘significant uncertainties as to the nature, extent and timing of any remediation action if required and the ultimate financial impact could be materially higher or lower than the amount provided’.
Santander UK said last month it disagrees with the conclusions reached by the Court of Appeal in its October ruling.
Bosses say the ruling ‘set a higher bar for the disclosure of and consent to the existence, nature, and amount of commission paid to dealers than that required by current FCA rules, or regulatory requirements in force at the time of the cases in question’.
‘The lenders involved in the cases subject to the Court of Appeal’s judgment have indicated that they intend to seek permission to appeal that judgment to the Supreme Court,’ they added.
The money it has put aside means that almost £1bn has now been assigned to handling the crisis, following hefty allocations from the likes of Lloyds Banking Group and BMW.
Car Dealer reported earlier this month that lenders had put aside around £680m with Santander’s provisions taking the total to a whopping £975m.
Elsewhere in its Q3 results, the bank revealed it took a £295m hit to post a pre-tax profit of £143m.
FCA ponders further delay
The news comes as the Financial Conduct Authority (FCA) has revealed more details about its latest delay to the time dealers have to handle complaints.
The window has already been extended several times by the regulator, which announced last week it was consulting over a further delay.
The body has now announced it is considering two potential dates of May 31, 2025 and December 4, 2025.
A spokesman said: ‘The FCA is consulting on two options for extending the time firms have to provide final responses to motor finance complaints involving a non-discretionary commission arrangement:
- ‘Until 31 May 2025, reflecting how long it may take to hear whether the Supreme Court has granted permission to appeal. The FCA plans to set out its next steps on DCA complaints in May 2025. Subject to the outcome of any Supreme Court application, the FCA would update on motor finance non-DCA commission complaints at the same time.
- ‘A longer extension until 4 December 2025, to align with the current rules for motor finance firms dealing with discretionary commission complaints.’
Nikhil Rathi, chief executive of the FCA added: ‘The Court of Appeal’s ruling means many customers who bought a car using finance through a dealer could be owed compensation.
‘We want to make sure that consumers who are owed money get it in an orderly way, and that the motor finance market continues to provide competitive deals for the millions of people that rely on it.’
Main picture via PA Images
