Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
So here is my calculation based on averages. Over the 10 year period they loaned 1.5billion. Average car loan was 7k.
Ive divided 7k gbp by 1.5b gbp and multiplied the answer by the average estimated claim which is 3k gbp
The magic number I got to was 650m gbp.
This is all guess work and estimates but I prefer to work off this number than 100-200m that's been suggested as I believe that's just too low.
If Lloyds bill is estimated at a billion and they are the biggest player by far, how do you work out cbg are on the hook for billions
Close
If you want to buy this stock you may as well burn your cash.
100%. Those close to the investigation know how widespread this is. Outright fraud has taken place, much worse scale than the mortgage mis-selling imho
It depends on their exposure to this fraud and they’ll have to pay, no ifs, no buts. The big boys they went to bed with have a much stronger balance sheet to stomach losses. CBG however…going to the wall and the market knows.
Close Brothers plc share price crashed after the litigation notes provision last year and then issued debt to fund a share buy back. abrdn has reduced its shareholding in close as its funds impacted which could result in withdrawals and further share price falls. Both abrdn and close are shorted. Maybe more bad news to come ?
Don't write things that won't happen. They will not sent a banc in bancrupty will all the problems related to it.
No one will be buying an unquantifiable liability to the fraud they have partaken in.
Sweepers will be waiting for the carve up when they can’t afford to pay the bill given how small they are
Bill of several billions coming soon to CBG.
Would not want to be long on this stock.
DYOR
Looks like the car dealers /salesmen are more guily than the bank supplying the finance. Easier for the FCA to chase the bank though as too complex to find the many car dealers who obtained high commissions. This sounds exactly the same scenario as STJ regarding mis-selling/commission rates. Price got hammered then and still at lows. Ready to start trading on this one.
Whys it positive?
This is what they FCA are investigating and demonstrates they were involved.
Here is one of the cases investigated as an example to what looks like is going to happen.
the Ombudsman found that Black Horse was prepared to lend to Mrs Y at any flat interest rate between 2.49% and 5.5%, with any amount over 2.49% going to the dealer as commission;
the broker had discretion over what rate to charge. It set the rate for Mrs Y at 5.5% – the highest it could. This got the dealer the most commission;
the extra discretionary commission accounted for more than half of the interest that Mrs Y would have to pay;
Mrs Y was not told how large this commission was, nor that the dealer had set the interest rate and the commission;
the Ombudsman found that this was unfair.
The repayment is the difference in interest rate between what should have been charged and what was. The real kicker is the 8% interest per annum which will be what really hurts.
There are also a number of companies collecting claims which believes CB were in the wrong. Here is one, certainly worth a read:
https://carloanrefunds.redbridgefinance.co.uk/close-brothers-motor-finance
Happy Sunday!
Great information Karl from the CBG and highly positive.
The share price has not been at this level since 1995. I think anyone with a few synapses will appreciate, this will reverse north in a relatively short space of time. This company has made average net profit over the past 8 years in excess of £100 million with ease. Fine will be paid and the NAV will still be above £7 per share .....MINIMUM !!!!! The shorts will bail very quickly as have already made their moolah.
Golden opportunity. 📈😊😉
All 3 copied from CBG site
From January 2021 onwards* - Risk Adjusted Pricing Model
CBMF introduced an enhanced model which set the rate for the customer and adjusted the rate
according to the customer risk profile. Dealer discretion was removed entirely. Under the Risk Adjusted
Pricing Model, commission, if any, was/is paid as a fixed percentage of the loan size.
All historic models included a “hard cap” on the commission amount paid to the broker or dealer.
From 2016 to January 2021* – Downward Scaled Commission Model
CBMF introduced a Downward Scaled Commission Model, which capped both the interest charged to
the customer and commission paid to the dealer or broker. This meant that CBMF set the headline rate
for the customer and the dealer could only reduce this by sacrificing their level of commission. Under
the Downward Scaled Commission Model, commission, if any, was paid as a percentage of the loan
size.
Q. How have your commission models in the motor finance market evolved over time?
Over the past years, we have sought to ensure we complied with the relevant regulatory requirements.
Pre-2016* - Difference in Charges (“DIC”) or Upward DIC Commission Model
Close Brothers Motor Finance (“CBMF”) operated an Upwards DIC Commission Model. This allowed
the dealer or broker full discretion over the customer rate and the commission earnt on point-of-sale
finance, subject to a hard cap on the amount of commission. Under the Upwards DIC, commission, ifany, was paid as a percentage of the total interest paid by the customer. This model was prevalent
across the industry and was in line with the regulations in place at the time.
Looking forward to the volatility You have correctly stated as this is where trading makes the money. Personally, i believe it wont go down much more as there has been a sell off for a few weeks now and the other recent sellers are panic brigade.
Will see what happens over the next few months, but quite happy to take a stake at this level. Thanks for comments....
Its all the unknowns that's killing this SP and then the dividend removal.
I think 85% of the motor loan book might be affected then it depends on what amount were DCA contracts.
I think i read that Martin lewis claims 40% of the market were DCA if this is correct it would depend on CBG figures.
It is probably why the numbers vary from 50m to250m.
FCA might not do anything about normal commissions on normal contracts other wise where do you stop brokers of every industry ie mortgages/ pension/ /holidays/ loans/
DCA is a different matter.
FCA have been aware on this system forever and was ok with it and did not stop it until2021.
Every month that goes pass CBG banks 14m if there are no other write downs.
Best outcome FCA say no action needed SP goes up 100% instantly and more over time.
Semi bad outcome low pay outs 50m to 150m range
Bad outcome this drags on for 18 months to 2 years maybe longer with the bad news in 9months or an extension for 6 months then 37 weeks to action by which time CBG banks 240m to 330m.
If it really drags on for 3 years they would have banked 490m I think this is unlikely as the FCA would want to draw a line under this.
We will then end up owning a company worth 450m that makes 165m after tax profit.
I can’t see this being on the radar of a T/O, Financial Institutions tend to be on the conservative side of the spectrum. The issue here is, at this stage no one knows the extent of the fall out. The average claim I have read, ranges from 1100 pound to 5000, if it is at the higher end it will hurt. There is one thing for sure, the Management claim companies are gearing up like vultures. I agree that this is not Amigo, as they only have 20% exposure, but it will certainly have the volatility of Amigo over the next 6 months.
From an S.P. of £8 in early Jan to under £3 mid Feb. Looks well oversold so bought in on Friday. Vulanerable to takeover at this price.
I'm really hoping this isn't another PPI scandal. Close Brothers is a great business with some fantastic management. However PPI is still in memories of many and Close Brothers had a large number of PCP so with that until full outcome is known it's going to be very volatile.
Good luck to those with larger testicles than I.
I think you're right to be cautious ForeverNever as the SP could fall lower leaving the majority of investors even more underwater having seen the SP fall circa 43% since the beginning of February. Well, those that chose not to bail out. However, I do wonder whether all the bad news is baked in? We may well not have seen the bottom but guessing that is nire on impossible. The SP showed some signs of recovery just before close on Friday so that might bode well on the opening bell?
Reading an FCA report and seen various legal companies touting for work Im actually of the opinion these claims are going to happen.
Based on some other claims sites it appears average PCP finance compensation is around £3,000 so far, but some motorists have been able to claim as much as £10,000. The amount you receive is based on a reimbursement of the finance that you have paid so far and 8% compensation on top
The FCA is looking at finance plans used to buy a car before 28 January 2021.
Personal contract hire (PCH) plans are not affected.
It has decided on two cases, and in both found that the way the commission arrangement between the lender and the car dealer worked was unfair to the consumer.
The FCA is clearly concerned that these are not isolated incidents.
Im going to take a cautious approach here as I'm of the opinion this has further to fall.
I've been looking at similar workings as I thought 200m sounded quite low. The market has priced in a far greater amount.
I think it's all crazy. I may raise an issue with FCA because I've chosen to shop at Waitrose for several years and as I could have made the decision to shop at Aldi I want to make a claim for the difference in the price of the apples I've purchased 😂
Anyway. Let's say worst case FCA says we gotta pay it back. I would start off with using the same rates as the PPI:
***
PPI pay-outs are made up of: the compensation (which is the refund of the PPI premiums paid and the interest you have paid on those premiums), and. the statutory interest on the compensation, at 8%
***
What's the new value now??
Yes you right but too many snowflakes about as well imo
FCA are useless and totally inept , Bailey a prime example was a buffoon at the FCA so he’s made governor of the BOE and doing the same there ie clueless you really couldn’t make it up…
It is not just snow flakes who milked PPI and every other opportunity for free money. It is society as a whole and an industry of ambulance chasers has grown. FCA sit back and watch something unfold for years and only then do they something about it.