The financial difficulties continue for lender Close Brothers as it is forced to set aside a further £33 million in compensation for customers affected by mis-sold car finance deals.
This new provision marks a fresh blow to the company, which is already grappling with the fallout from an industry-wide review into historical car loan practices.
The Financial Conduct Authority (FCA) is currently investigating the prevalence of undisclosed commission models in motor finance agreements, a practice that led to customers being overcharged for their loans.
Close Brothers had already reserved funds for this issue, but the latest announcement indicates the scale of potential liability is continuing to grow beyond initial estimates.
The £33 million sum is earmarked to compensate customers who were unfairly charged, either through high interest rates or undisclosed commissions on personal contract purchase (PCP) and hire purchase deals.
The financial impact has been significant, placing considerable pressure on the lender's profitability and balance sheet.
Close Brothers' continuous need to increase its provision underscores the severity of the mis-selling practices and the likely extent of the redress scheme being mandated by the FCA.
The entire car finance industry remains on edge as the investigation progresses, with many lenders facing substantial compensation bills, but Close Brothers is clearly among those most severely affected by the regulatory scrutiny and the need to rectify historical wrongdoing for its customer base.
This new provision marks a fresh blow to the company, which is already grappling with the fallout from an industry-wide review into historical car loan practices.
The Financial Conduct Authority (FCA) is currently investigating the prevalence of undisclosed commission models in motor finance agreements, a practice that led to customers being overcharged for their loans.
Close Brothers had already reserved funds for this issue, but the latest announcement indicates the scale of potential liability is continuing to grow beyond initial estimates.
The £33 million sum is earmarked to compensate customers who were unfairly charged, either through high interest rates or undisclosed commissions on personal contract purchase (PCP) and hire purchase deals.
The financial impact has been significant, placing considerable pressure on the lender's profitability and balance sheet.
Close Brothers' continuous need to increase its provision underscores the severity of the mis-selling practices and the likely extent of the redress scheme being mandated by the FCA.
The entire car finance industry remains on edge as the investigation progresses, with many lenders facing substantial compensation bills, but Close Brothers is clearly among those most severely affected by the regulatory scrutiny and the need to rectify historical wrongdoing for its customer base.