V12 operate in the prime market and commissions tend be based on a % of the loan advance, I would say 6% is probably around average. Moneyway operate in the near prime market which tends to pay a flat fee commission regardless of the size of the advance, £400-£600 is normal. If you worked on an average £600-£700 a deal that is probably not a million miles away although some will be much higher and others lower |
Any rough idea how much is the commission the dealer gets from the lender, for a typical loan? |
Exactly, why wouldn't you expect the middle men to take a cut? Nobody cares about that as you say, all the consumers care about is whether they can afford the monthly payments on the new BMW or Tesla..
Any judge worth their salt and possessing an ounce of commonsense should throw this out of court..
But we live in a world where bankers are hated and any blame is always thrown at them and ulitmately end up paying. |
The world has gone mad! Sue Sue Sue and legal companies reap the benefits! If I take out a loan on an asset, all I care about, is how much I pay per month, I have no interest in commissions to anyone. I certainly would fully expect middle men to get a commission. |
I read that the Supreme court ruling will be May 25. |
Interesting segment on this sector on BBC R4 business news this am (6:15am), mainly focused on CBG LN. My understanding is that the appeal could be months off, which leaves the sector in limbo. As we all know, banking is a confidence business.
Post #963 asks "why fines" - because it appears they may have broken the law. |
That's the thing if the Supreme court rejects the Appeal court ruling then the current share price should recover. However, if the Supreme court back the Appeal court ruling
then it's going to be difficult.
In the Times yesterday a former regulator slammed the FCA for providing a lack of clarity in it's rules which let in this Appeal court judgement. |
In terms of the size of compensation amount, I dont think it would be relevant to look at the size of the current loan book because many customers will have fully or partially settled their agreement, in yet still could be eligible for compensation. I'm not sure how far back the claims could go but assuming it isn't time limited then in theory it would be for the full amount of commission they have ever paid on every car finance agreement plus interest on top. I dont know the exact number but under those circumstances it is likely to be substantial. I think the best hope is either the Supreme Court ruling or some action against the FCA, otherwise it would feel to me as if a capital raise is potentially on the cards since removing the dividend is unlikely to cover it. Please dont rely on this, I am not a legal expert and could well be wrong. |
If they paused business then restarted one would assume thy think their non DIC business is safe. |
I'm over 42% down. |
Oops! :-(
cfro 1 Nov '24 - 07:35 - 943 of 964
Doesn't look like the bottom yet - more problems in the vehicle finance division.
Indeed.
Secure Trust Bank PLC Trading Update
01/11/2024 7:00am
"We are disappointed that it will take longer than expected to recover value from the excess level of defaulted Vehicle Finance balances, and the recent Court of Appeal decisions have added additional uncertainty on the benefits to be realised in 2024.
Notwithstanding the near-term impacts of the excess defaults in Vehicle Finance, we have seen arrears in Vehicle Finance fall to the lowest level since 2021, have continued to grow total net lending, continued to optimise our cost base, made good progress on early repayments of TFSME funding, and see continued growth opportunities ahead of us." |
Why fines though? They have complied with FCA, guessing it would be compo.
As for the collections I’m guessing people spent the money whilst it was paused, company can’t charge interest as they paused it now it will hit their margin as the loans are extended. Repossessions being sold into a falling car price market? |
Ouch.So maybe now is the time to do a buffet and buy in when the tide goes out ....thoughts? |
On the 15th of August, David McCreadie bought around 12k shares on-market at roughly UK£8.41 per share. This transaction amounted to 20% of their direct individual holding at the time of the trade.This was the largest purchase by an insider in the last 3 months.David has been a buyer over the last 12 months, purchasing a net total of UK£181k worth in shares. |
Thanks so on a 230 million loan book the commissions can't have been that huge ? |
Feel free to shoot me down just hoping to provoke a discussion |
My understanding is that the ruling relates to all car finance commission, not just discretionary commission (ie where a higher commission is paid based on a higher interest rate to the commission) and that the compensation to the customer has been set out as the commission amount plus interest. |
I don't know this company at all but I'll make some assumptions in the hope that somebody more knowledgeable will correct me .From the 2016 annual results the motor finance book was £230 million . Let's assume conservatively that £20 million was lent out on discretionary commish . Let's say on an average 15k loan the cost to the customer of these dodgy lending practices was 1k from not getting the right loan . Whack some penalties and interest on there and let's say average fine is 5k . So about a 3rd of the discretionary commission loan book or roughly 7 million in fines for 1 year . Loans could be multi year but conservatively let's multiply by 3 , and we get 21 million in fines |
Anybody care to guess as to the size of the fine ? Surely if a bank that only did mid single digits of its vehicle finance lending with discretionary commission , and vehicle finance was only one part of its lending book and it only did it for 3 years it's not going to be a material part of book value ? |
Hi John, Moneyway and V12 paused lending for a few days (in common with other car finance lenders) while they amended their documentation so that the commission amount paid to the broker/dealer was disclosed to the customer and the customer could give their consent. |
What I found interesting in the statement was this:
Legal and Regulatory Matters
Following the recent Court of Appeal's decisions, the Group paused new consumer lending in Vehicle Finance to consider the implications of the ruling and we are now commencing new business once again. |
Did the defaults happen also because with all the publicity of vehicle finance mis selling, people simply thought they would get away without paying it back ? |
STB – Secure Trust Bank
2*
Secure Trust Bank issued a profit warning this morning triggered completely by weakness in the Group’s Vehicle Finance business. As indicated in the Group's interim results announcement on 14 August 2024, the pausing of collections activity following the FCA's Borrowers in Financial Difficulty review led to a higher volume of Vehicle Finance loans reaching default status...from WealthOracle
wealthoracle.co.uk/detailed-result-full/STB/936 |
I think we could do with more clarity on what exactly is going on in the vehicle finance division. Hopefully we will get more colour when things become more clearer in the next statement.
£10m - £15m is quite a lot of losses. It seems that they stopped doing business (i assume because of the previous review), then the defaults happened.
Some questions then: Why such a large amount of defaults? What was the real reason for this? Economic hardship or were some customers advised to pause paying their loans? |
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