Secure Trust Bank Share Discussion Threads

[red ninja] 02/12/2024 09:54

Roll up, roll up take your bets on the great Vehicle Finance Loan scandal.

Some investor will gain a fortune and some investors will lose a fortune.

Only six months to wait for the Supreme Court judgement.

[sandeep67] 02/12/2024 08:40

they will claw it back slowly with higher rates on new loans now - simples

[p1nkfish] 01/12/2024 21:53

Unfortunately she has no influence.
I agree with her too.

[apple53] 01/12/2024 20:45

Intriguing piece by Mary Dejevsky in the Spectator. I don't think I've read a better analysis anywhere.

[digger18] 29/11/2024 16:29

If the case is brought forward, it will be FCA pressure and not government.

[red ninja] 25/11/2024 12:40

P1, Unfortunately I fear you are right.
Hopefully we won't regret their inaction.

[p1nkfish] 25/11/2024 09:42

RN, if it involves a payout to consumers over business, Labour more likely to come down against business. They don't get commerce and wealth creation. Just not in this Governments DNA.

Let's see what happens to unemployment, might prove it.

[red ninja] 25/11/2024 09:21

He also said that Grant Thornton see this judgement as possibly leading to contagion into other areas like insurance.

I agree with Oliver Shah, but at the end of the day it is the Supreme court in 6 months who can put the brakes on the Appeal Court judgement.

I had hoped the Supreme court judgement could be moved forward, perhaps the Labour government could encourage them ?

[cfro] 25/11/2024 09:15

A good piece in yesterdays Sunday times by Oliver Shah. He was very critical of the judges decision. He says it should be over-turned in the appeal court as this is very serious.

Indeed so, i don't think most people are aware of just how serious this is. To think that some judge in some court can bring the gavel down which in one foul swoop has the potential to bring the whole UK economy to it's knees..

[buffett4] 24/11/2024 17:31

Agree, the potential discretionary commission liability is manageable and that the current price is a bargain if the commission liability only pertains to discretionary comms. If on the other hand it pertains to all commission paid then it is a whole different ball game and does indeed have wide ranging economic consequences.

[chabuddy] 24/11/2024 17:17

STB's January 2024 Trading Update stated that between 2014 and 2017, a "mid-single digit proportion of [their] new vehicle finance loans included [discretionary commission arrangements]".

Each FY earnings between 2014 and 2017 confirms that the majority of new business lending was for used rather than new cars. Assuming that 'mid-single digit proportion' = 7% (higher to be conservative), that 50% of new business lending went to new cars (will be less than this, but trying to be conservative), and that they used discretionary commission arrangements for the full year in 2017 rather than only half the year (and the same in 2014, given STB provided no clarity on this; this is conservative given that Moneyway — one of STB's motor finance lending platforms — stated that they stopped using these arrangements in June 2017), I estimate that ~ £15.6m was lent that involved the use of discretionary commission. Redress doesn't equal full refund, and even after applying prejudgment interest I think £15.6m can be seen as the upper bound for the discretionary commission arrangements (the actual figure likely less than half of this).

STB's market cap decline of > £80m post-judgment seems to suggest that the market views a risk of redress for non-discretionary commission arrangements as well, with a consumer rights head saying that "anyone who has already been told by their finance provider they didn’t have discretionary commission on their loan should now be asking if any commission at all was applied."

Clearly the FCA have sh*t the bed on this one, but if significant redress only applies to discretionary arrangements then it looks like STB will be fine. If it applies to non-discretionary arrangements, this will have wide-sweeping consequences across the entire economy, and won't be just limited to motor finance firms.

I personally think at ~£3.5/share, this is increasingly looking like a really good punt, given that pre-judgment sell-side consensus implies that at the current share price it would be trading at < 1.5 P/E within 2 years!

[ih_407763] 23/11/2024 18:45

This gives a good summary of the situation.

www.ashurst.com/en/insights/driving-change-in-the-world-of-commission-disclosure-under-the-bonnet-of-the-uk-motor-finance-case/

[p1nkfish] 22/11/2024 23:24

Cost of car finance is probably only heading one way to help pay for this.

[red ninja] 22/11/2024 21:28

In today’s article on vehicle finance in the Times, the head of FCA is saying compensation may mushroom.

The time for complaints is to be extended. This is going to be an issue for sometime unless the Supreme Court can apply the brakes in 6 months.

[red ninja] 22/11/2024 16:40

Surely it is the FCA which regulates, but the courts are supreme and can in effect overrule the regulator.

Isn't that what has happened in this case ?

Thus, The banks were in effect misled by the regulator.

However, the regulator claims the banks were not following their fiduciary duty
in law.

Welcome to UK law.

[p1nkfish] 22/11/2024 11:56

So who regulates, FCA or the courts? Sounds like it means the FCA are lacking and incompetent for not having had this covered.

[ih_407763] 22/11/2024 09:58

Unfortunately the court passed a judgment which went beyond FCA guidelines, which may now set a precedent. Hopefully the appeal will see sense.

[p1nkfish] 22/11/2024 09:54

If no law is broken what is the case to answer under the law?

If no regulation is broken what can the regulator do?

[ih_407763] 22/11/2024 09:34

They haven’t broken the law, it’s all about transparency of commission paid, which was not openly disclosed? and in the court view, sufficiently explained to end clients by brokers. Ultimate lenders are deemed to be responsible for the actions of their brokers, To what extent will be the part of the appeal. In my opinion, yet more of a nanny state, with no responsibility taken by client, who surely should only cares about how much is payed monthly! If you don’t like the figure, don’t borrow the money. Obviously I say this within the protection of regulation. Such FCA regulations were no doubt followed, but the FCA are not the law and hence the issue here.

[p1nkfish] 21/11/2024 15:40

It's most annoying as I find it hard to believe any company like Secure Trust Bank would have deliberately broken the relevant law or regulation at the time of the signing of the credit agreement.

There is a systemic issue here.

[omvi] 21/11/2024 12:47

I doubled down at 500 and I’m still bullish at 400. Risk is way overblown. STB looking at 4x upside in my opinion.

[p1nkfish] 21/11/2024 10:05

If the authorities get this wrong there will be substantial damage to the vehicle financing market and overall cost increases. Just what that market doesn't need.

2025/6 will be very interesting, nationally, and possibly for all the wrong reasons. Potential for return of inflation and increased unemployment.