Close Brothers sets aside £165m for possible compensation costs

Following what it describes as a "thorough assessment" of the case, the company notes there remains "significant uncertainty" over the outcome of both the appeals process and the Financial Conduct Authority’s investigation.

The estimate accounts for potential operational and legal costs, as well as possible remediation for affected customers.

The business states that while the provision will affect its capital strength, it will remain "comfortably above regulatory requirements" and is "well placed to absorb the impact of the estimated provision".

Last October, the Court of Appeal ruled that lenders did not receive consent from customers regarding the amount of commission charged on motor finance. This ruling has opened the door for a potential fresh wave of complaints.

Close Brothers has appealed against the decision, which will be heard in the Supreme Court later this year.

The company stated: "We have completed preparations for a significant risk transfer of assets in Motor Finance and continue to analyse any adjustments to the timing and structure of a potential transaction in light of the Court of Appeal judgment and our ongoing appeal to the Supreme Court.

"The group continues to evaluate a range of additional potential management actions to further optimise risk-weighted assets, including potential risk transfer of other portfolios, a continuous review of our businesses and portfolios, and other tactical actions."

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