Close Brothers affirms it can absorb £320m of FCA car finance compensation
Finance teams at UK banks with motor-loan exposure face a binding FCA compensation charge
Change
Close Brothers confirmed it will absorb about £320m of liability from the Financial Conduct Authority's £9.1bn car finance compensation scheme, funding the £26m shortfall from existing capital reserves.
Why it matters
The Financial Conduct Authority's final scheme creates a binding compensation liability for lenders involved in motor finance. Affected lenders must now account for that liability in provisioning and regulatory capital calculations, which reduces capital available for other uses.
Implications
- — Finance teams at UK banks with motor finance portfolios — must immediately confirm and book provisions and update regulatory capital calculations — failure to do so risks regulatory capital breaches and supervisory action.
- — Investor-relations teams at UK-listed banks with motor finance exposure — must immediately revise investor guidance and earnings forecasts to reflect FCA liabilities — failure to disclose updated liabilities risks sharp share-price corrections and heightened investor scrutiny.
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