Close Brothers Share Discussion Threads

[stoopid] 12/1/2024 19:05

I would start at the figure top vest has already quoted, £250m and revise upwards.Anything less would be a bonus.....

[flyfisher] 12/1/2024 19:00

Topvest, Do you have a link to the settled cases.

CBG has £600m outstanding under the TFSME scheme, £228m of which is repayable this year. The current issue is likely to make repayment more onerous.

[alex1621] 12/1/2024 16:37

Bear in mind you will have Martin Lewis promoting how to claim compensation, even if you are not entitled. They will get swamped by chancers and ambulance chasing lawyers looking to make a quick buck. It is impossible to say how serious this is for CBG.

[topvest] 12/1/2024 16:26

Yes, its quite difficult for the Board to say anything at this stage, if we are talikng big numbers. The contingent liabilities note in the 2023 AR is the only sign that things were getting worse. I missed it - my costly error!

Given the Ombudsman has already determined settlements of all the discretionary commission + 8%/annum in the twoexample cases, it appears to me that the FCA will slam all discretionary commission arrangements. If it was only a limited exposure, I think the Board would have come up with some reassuring comments. If you assumed £10m a year of commission payments at risk you could be at c£250m including punitive 8% interest/annum and assuming its 2007-2021 but I am not sure that timeline is correct. Of course, we have no idea of the commission payments at risk - could be anywhere between a few million - £30m a year.

[faz] 12/1/2024 15:53

A bit hasty, even for a shorter. The FCA havent done their review yet. NO doubt the Board already know the potential here and they may see fit to advise the range of exposure, but that could be taken as an admission they knew things werent right.

[jonnybig] 12/1/2024 10:46

Dodged a bullet here. Was tempted cos of weakness, now I know why the fall. Possibility of a significant dividend cut or even suspension to fund what could be large losses. Cbg need to update the market asap.

[topvest] 12/1/2024 10:13

I have just been catching up on the other hand grenade from the FCA this week on premium finance - that's £1bn of their debtor book as well. The FCA have said its a "poor product" and people who can't pay the premium up front are subsidising the rich. Blimey - the FCA have lost the plot. Of course, you should get a better deal if you pay with cash rather than a loan. What planet are they on!

[topvest] 12/1/2024 10:02

Presumably some customers will have multiple claims as they may have had 4 or 5 cars over the 14 year period?

[flyfisher] 12/1/2024 08:38

Consumers will have up to 15 months to refer their complaint to the Financial Ombudsman, rather than the usual six months.

[flyfisher] 12/1/2024 08:33

The ambulance chasers will be getting excited !

[topvest] 12/1/2024 08:26

Unfortunately, I have sold at £7 for a 10% loss. Looking at the FCA examples the compensation could be c£1k + interest on each car loan - say c£2k. We are talking massive numbers. Very unfortunate for the banks all of this. This is going to hang over CBG and all of the motor finance lenders for years. Another example of crazy regulation in the UK!

[topvest] 11/1/2024 20:21

Looks like it goes back to 2007...14 years.

"A significant number of motor finance arrangements made between 2007 and our ban
in 2021 may have involved DCAs. This includes motor finance sales prior to us taking
on the regulation..."

I don't think S&U pay commissions - certainly not disclosed in their accounts.

Commissions payable have reduced from about £50m a year to less than £20m a year but very unclear on how much is Retail motor finance - probably only a proportion. Needs an RNS really as the maximum exposure is probably the commissions payable to car dealers + 8%/annum delay interest on-top. I would agree that it could be another Novitas sized hit.

I must say that I think this retrospective legislation is a tad unfair on the banks, who were complying with the rules at the time. Compensation culture UK!

[essentialinvestor] 11/1/2024 17:30

I looked at this earlier having not seen the FCA news!.

[fevertreeman] 11/1/2024 17:12

Share price definitely weak because of FCA motor finance review. Also note the FD sold some today....clearly this is going to hit share prices. One of the best-managed players in the sector is S&U chaired by the inestimable Anthony Coombs, a doyen of the industry renowned for running a tight ship. The fact that at 2pm today he sold 6,500 at £22.50 suggests to me he sees a trading opportunity to buy back in lower. CBG could well get caught up in this & slither further given the prefect storm of Novitas, Winterflood's problems in small cap space & now this.

[stoopid] 11/1/2024 17:01

CBG are only just recovering from the provisions they had ro make for Novitas (£170m ish?)CBG will need to look into how much they need to put aside for this debacle. Could cost them a few hundred million, depends on how far back people are allowed to go and how liable they are...

[stoopid] 11/1/2024 16:57

Yep, Martin Lewis reckons it could be on a scale similar to the PPI claims. This is going to drag on for years and the FCA haven't even finished their investigation yet. Some are saying it could be on the scale of PPI, as much as £40 Billion.

[topvest] 11/1/2024 16:20

Looks like the FCA review will likely lead to some sort of liability now:

Contingent liabilities
Motor Finance commission arrangements
The Group has received a number of complaints, some of which are with the Financial Ombudsman Service, and is subject to a number of claims through the courts regarding historic commission arrangements with intermediaries on its Motor Finance
products. This follows the FCA’s Motor Market Review in 2019. Depending on the outcome of the court’s rulings and/or regulatory findings on the matter, these complaints and claims may give rise to a potential future obligation to compensate customers. It is not currently possible to estimate the financial impact, if any, or scope of these or any future related claims.

This is the reason for today's weakness. I had just tripled my position - very unlucky.

[cwa1] 11/1/2024 15:21

Yup, looks an absolute dogs with fleas. I'll have a few at 715p, thank you very much :-))

[suetballs] 11/1/2024 14:23

Look at the chart - absolute dog.

Suet

[mortimer7] 11/1/2024 14:17

Maybe the FCA investigation in to Motor Finance Commission is a factor in todays decline - FCA issued a statement this morning which isn't good news for lenders/brokers.

[stoopid] 11/1/2024 13:53

Nope, but with the current views of stagnation and possible debt defaults comming then banking shares will suffer.CBG are also suffering because of its ill fated purchase of Novitas which it is still making provisions for, another 100m/120m in the last financial year.Also their wealth management arm Winterflood has been finding it hard going.They were confident enough to raise the dividend so hopefully profitability will be better and share price should recover this year barring any wars or catastrophes...Current dividend equivalent to nearly 9%

[faz] 11/1/2024 12:56

this is painful. Any news anywhere?

[stoopid] 18/12/2023 11:42

Dunno, but I'm in at 784 and think that's a great price.Their current woes with the wind down and losses (another 100m in liabilities) of Novitas and their ill fated investment arm are to blame. Hopefully will be back on track and closer to 1000 soon.....

[damanko] 14/12/2023 20:25

Ditto, is CBG really only worth a third of its value some years ago..?

[faz] 14/12/2023 08:54

Here is comes; I expect this to do much better in 2024 and have loaded up accordingly over the last two months