Close Brothers Allocates £165m for Car Loan Compensation Costs

The lender faces legal challenges and regulatory scrutiny over hidden commission payments in motor finance deals from 2007 to 2021.

Close Brothers, a major UK motor finance lender, has set aside up to £165 million to cover potential legal and compensation costs linked to a car loan commission scandal.
The Financial Conduct Authority (FCA) is investigating past practices where car dealers set interest rates to earn undisclosed commissions, a practice banned in 2021.
A Court of Appeal ruling in October 2024 deemed such commission payments unlawful without borrowers' informed consent, opening the door for further consumer claims.
Close Brothers plans to appeal the ruling in the Supreme Court and has bolstered its financial position, including selling its wealth management division for £200 million.
Analysts predict the total industry compensation costs could reach £8–£13 billion, with other lenders like Lloyds Banking Group already setting aside significant reserves.