RBC warns of potential £250m premium finance hit to Close Brothers
If a recent court ruling on motor finance litigation is upheld and spreads to premium finance Close Brothers could suffer a £250m hit, equity analysts RBC Capital Markets have warned.
The initial estimate of Close Brothers’ potential liability in the event of a “bad outcome,” which the experts acknowledged was the “downside scenario” of a “bleaker path,” came alongside modelling a £100m scenario.
In 2021, after research into the motor finance sector, the Financial Conduct Authority banned discretionary commission arrangements removing the incentive to increase the interest rate that a customer pays.
This January, after several rulings by the Financial Ombudsman Service, the
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