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With out any news this is going to drift upwards unless institutions start to sell but while they adding this is only going to go up over time. why would it drop 30% the shock and awe is over.
I guess I don't look it in exactly the same way, but I see a similar future. I'm think the SP will falter at around 385. If it doesn't then I see 396 or above and a probable test of 406-407. But having said all of that (and I'm trading it). I also think we will see 295-300 at some point in the nearish future so I am not accumulating it for the moment.
Trimming on the move to £4 and then reassess. GLA.
Well done
I project volume today in region of 731,000, which would be lowest volume for 12 days. The current bottom formation, was commenced with a large measuring candle day, on 15/2/24, on heavy volume. Since the large measuring candle high was 392, perspective shows that today's rally, on very different light volume, does not constitute a breakout. The RSI(relative strength index) is still below 50, which means CBG, is technically still within an overall downtrend formation. Measuring bar bottom formations, often take 26 days or more to complete, so 12 days is more likely, the intervening rally before testing bottom again.
BUT the FCA review will take longer than 12 months to complete, could be twice, three times that long. The market hates uncertainty. No known or even best estimate outcome at present.
Wait for 360+ breakout
Lenders and Vehicle dealers/brokers are not going to sit and wait for some ruling to be imposed by the FCA to hand over cash Bonanza to vehicle owners. It is going to be a real legal battle .It might take a long time to conclude, not just six months. See the point of view of a legal expert.
https://www.am-online.com/opinion/2024/02/23/executive-view-the-fca-and-martin-lewis-where-s-the-harm-anyway
Got there in the end! Couldn’t post link as Telegraph block it, read first post first (3rd down)
Balanced piece imo
Martin Lewis, the Moneysavingexpert.com founder, is among them. He said the watchdog’s investigation was “huge” and could lead to “PPI-type scale” payouts. If you think you might have been mis-sold, read our guide before putting in a claim.
A spokesman for Lloyds Bank said: “We are currently reviewing the recent FOS decision and will support the FCA with the upcoming industry review.”
But motor finance industry voices have argued that while, on paper, the ability for dealerships to set interest rates themselves looks bad, in practice it enabled better, more flexible deals for consumers in the vast majority of cases.
Adrian Dally, of the Finance and Leasing Association (FLA), said: “Ultimately, being blunt, the scale of this has been misrepresented.
“What the FCA is doing has been misrepresented. Motor finance providers, our members, have rejected most of those [complaints] because we consider what happened was within the rules.
“There’s a perception that what happened was lenders allowed dealers to raise interest rates to earn more commission. No, that isn’t how it worked at all, what goes up can come down. They had discretion to lower the rate. Ultimately, dealers wanted the [discretionary commissions] so they could bring down the rate in order to match what a consumer was offered elsewhere. The consumers benefited more than they lost from this discretion.”
Mr Dally said that discretionary commissions were “something we have been aware of for a long time. It’s not been secret, it’s been out there.”
It is a view shared by Dominic Threlfall, former managing director of Pebley Beach Group, a car dealership headquartered in Swindon, Wiltshire, who said discretionary commissions were a vital tool to stay profitable during his more than 30 years in business.
He said: “Did it happen? Yes. We did increase interest rates, but it wasn’t an insult. It was part of a package. When people buy a car they buy a package and the dealership will stack the package up.
“Each customer is different and that’s what [we] tried to do, to make a deal that fits the customer.
“We have customers coming in who may not have had 10pc deposits therefore we have to reduce their car prices down a bit. [So] what you would do is reduce the car price down, you might put the interest rate up a little bit to compensate for that.
“Because [dealerships] were earning more on commission that meant they could reduce the price of the car, or reduce the price of the trade-in car.
“Just by putting the interest rate up a little bit the customer has walked out with a much better package,” he said, arguing that the consumer may have to spend less cash up front.
“It probably cost the dealership a little bit of money to sell it that way”, he said. “Companies should not be crucified for that. It’s a package to buy a car. We’re not a nanny state, people are making an informed decision that they want to buy that car.
“I laugh almost at what is going on,” he said, adding “It is almost as if profit is a dirty word.”
Despite the motor industry’s protestations that the FCA’s intervention is a storm in a teacup, there are plenty who think car finance could result in large sums being returned to hundreds of thousands of customers.
How car finance scandal unfolded
Banks are setting aside huge sums against compensation – but dealers say they did customers a favour. By Noah Eastwood
The Vauxhall Zafira was one of the most reliable family cars ever to roll off the production line, so driving one home after paying just a fraction of the price must have felt like a steal.
That’s what Lisa King thought when she bought a new top-of-the-range Zafira in 2012. She paid a little under £14,000 upfront and financed £12,000 over five years in repayments of £279 a month. “It was a lot cheaper than the book price,” she said.
The catch? A whopping 12.7pc interest rate, at a time when the cost of borrowing was near record lows.
“We didn’t think anything of it,” despite an “excellent” credit rating at the time, she said. “When the salesman said we wouldn’t be able to match that price elsewhere, we said OK.”
Six years later, following a notice from the City watchdog in 2019, Mrs King, along with thousands of other drivers, discovered that their motor finance deals may not have been sold “subject to status”, which would have set interest based on a credit rating. Instead, it was at the whim of the dealership in roughly 40pc of cases, according to the Financial Conduct Authority (FCA). What is worse, car dealers, who act as brokers on behalf of lenders, in Mrs King’s case Black Horse (a division of Lloyds Banking Group), were incentivised to secure higher rates with extra cash.
The so-called discretionary commission arrangements were everyday practice at dealerships for decades. They played a role in millions of loan agreements and potentially led to consumers collectively paying billions of pounds over the odds for cars.
The commissions were banned by the FCA in 2021 but it was initially implied the ban would only cover new loans as opposed to historic claims.
But a landmark case in January, where the Financial Ombudsman ruled in favour of a case against Black Horse, has paved the way for thousands of new claims going back to 2007 to be heard. The FCA is now investigating whether to greenlight mass payouts, with a decision due in September. It found drivers paying up to £1,100 over the odds on a £10,000, four-year finance deal.
‘As dealerships were earning more commission that meant they could reduce the price of the car’
Many are already describing the unfolding situation as the “next PPI” and claims management companies will be smelling blood as major banks brace for a wave of payouts, including Lloyds, which this week said it had reserved £450m against possible compensation.
The total sum banks could be on the hook for is between £6bn and £16bn, according to estimates from RBC Capital, which will worry anyone with a stake in any one of the major FTSE 100 banks that could be implicated.
I can not edit I have got the answer I was looking for.
On the update
We expect to report overall group AOP of approximately £94 million. After group (central functions) Net expenses.
My question is net expenses mean after tax?
I have always thought Net means after everything
With the central functions wording does this mean just net after this but before tax?
They do trade quite well as you say, not so hot today though. Did 337.2 and out at 345. Tax kills it a bit and you do have to chuck a fair bit of money at it. Nibbling down but I have an L of a way to go.
The facts are that it will be SEPTEMBER before the FCA publishes anything so we are in for months of speculation. With the volatility here, hoping to trade this to sub £1 average cost before then then.
September is a long way off and the sum of the intrada moves before then will far exceed the sub £3 share price many entered this recent phase at.
280 - 350 - 318- 349 in a few days = 126p - you won't catch the full moves but there are ways of catching most.
Even CBG at these levels can be a great trader.
DOYR and never advce nor a recommendation
New business from Winterflood Securities, in trading Govt Bonds.
https://www.ft.com/content/0a419762-203b-49b0-a63b-0e03e831375e
"Analysts at the Royal Bank of Canada estimate that Close Brothers will be hit with a 200 million redress bill."
Financial Times...
https://www.ft.com/content/3bf0e7bc-fbe4-4e27-a785-a33fafe03654
This is nowhere near PPI, where claimants were paid back in full. Each claim here will be based on each individual case. Each claimant will only be due a payment of the difference in the interest rate that they were charged compared to the interest rate that they "should" have been charged. Nothing more than a couple of years dividends maybe. IMHO. Gla. Dyor.
"Analysts at the Royal Bank of Canada estimate that Close Brothers will be hit with a 200 million redress bill."
Financial Times...
https://www.ft.com/content/3bf0e7bc-fbe4-4e27-a785-a33fafe03654
Closed yesterday at 347 and opens at 339
“Analysts at RBC Capital Markets have estimated the car financing problems, which have echoes of the payment protection insurance scandal, could cost Lloyds £2.5bn, more than any of its rivals.”
As has Martin Lewis.
And/but the two rulings came nowhere near to the complete refund outcome of PPI on the basis that the customers got use of the car and took finance, so would have paid some interest.
The key difference between Lloyds and RBC is that Lloyds will be actively talking to the regulator about this and RBC don’t have a seat at the table.
All I’m saying here is that Lloyds almost certainly has the better view.
It’s also important to note that RBC are far from impartial here.
CBG WILL have a clue about the range of outcomes. They’re just not sharing it yet.
“An unexpected beneficiary of Lloyds’ results was Close Brothers, whose shares have yo-yoed in recent days but are down more than 40 per cent over the month due to its exposure to the FCA’s inquiry into motor finance.
The shares rose by 241⁄2p, or 7.5 per cent, to 3473⁄4p as the Lloyds boss, Charlie Nunn, who set aside £450 million for the review, said that remediation would be lower than previous problems such as payment protection insurance”
Analysts at RBC Capital Markets have estimated the car financing problems, which have echoes of the payment protection insurance scandal, could cost Lloyds £2.5bn, more than any of its rivals
So the Lloyds liability may be more than 5x their estimate of £450 million and obviously CBG do not have any clue at present what their final liability will be
If it is anywhere near the worst estimates of £1 billion then it could easily lead to receivership and liquidation for CBG
I reckon anyone trying to short this stock is starting to get worried. I have no idea if we get an up day tomorrow but if we do I reckon most shorts will bail out.