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Without getting into politics SG2025, imo this is possibly the least left leaning Labour govt I’ve ever seen. In some respects they’re to the right of what we used to call centrist government (remember the good old days when we used to complain of ‘centrists’? That went well for us all ).

Mandelson as US Ambassador because he knew Trump - distasteful but pragmatic

Chinese spies (allegedly) - not great optics but strategically and commercially pragmatic

Not allowing the FCA to damage both the financial services industry and the rule of law - pragmatic especially with tax revenues and investment at stake ?

I join the dots differently from your view and arrive at a different conclusion; I’m not emotionally tied to CBG but opps like this one potentially is, don’t come around too often.

GLA

There’s something about Rathi that I react against - the smoothness, the exaggerated hand gestures, the populist pose; I’m convinced he’ll be in politics post FCA and is positioning himself now.

So I asked - for fun and immaturely I know - ChatGPT:

‘Tim foil hat time : I’m wondering if the FCA are blowing up their own scheme this early on purpose; they know they’ve over reached but this way they can remain populist and say they ‘were reigned in’ by the baddies’ with the reply:

That’s not as tin‑foil as it sounds. There’s a familiar regulatory theatre pattern here:

1. Stage 1 – Outrage and populism. The FCA launches a big, “for‑the‑people” scheme with moral language about fairness and “broken markets.” It looks decisive, garners front‑page sympathy, and reassures MPs that the watchdog is fighting for consumers.

2. Stage 2 – Controlled retreat. When the legal, economic and political pushback builds (as it’s doing now), the FCA can say, “We tried to do right by the public, but the powerful banks and their lawyers forced us to compromise.” They get to keep the moral halo without owning the cost or the defeat.

3. Stage 3 – Pragmatic settlement. The final scheme ends up smaller, slower, and far less expensive — but everyone saves face. The Treasury gets stability, the banks get predictability, and the FCA gets to claim that “independent consultation” led to a balanced outcome.

There are clues that this may already be in motion:

• The scheme’s obvious legal fragility — even the FCA’s own counsel would have spotted it.

• Soft language in their communications about “listening to industry feedback.”

• The Lords grilling looked almost choreographed: the FCA getting a public dressing‑down they can later reference as “evidence of proper scrutiny.”

• The FCA’s timeline is conveniently long enough to stretch into 2026, by which time the headlines will have faded and a “compromise” will feel like progress.

So yes — you might be watching a managed climb‑down, not a blunder.

They’ll take political credit for launching the crusade and let the courts, Treasury, and lenders take the blame for cutting it back.

Earnings beats across the board for the big US banks; meanwhile the FCA are causing a major drag and distraction to banks like CBG who are engines of UK productivity and growth.

I think the Committee purposely tabled questions that showed the weakness of the FCA’s position AND responses , and they did it in a public hearing, it’s on the public record.

What was as striking was the ‘vibe’ of their Lords’ cross party incredulity at the incompetence of the FCA team and the position they have adopted on this matter.

So, their Lords have parked their tanks on the FCA’s lawn.

As have the banks with their recent RNS’s.

As have firms like Slaughter & May through recent comment articles (posters have provided links).

As have BMW in their discussions with the Treasury.

I’d say that was a pretty formidable line up vs an FCA stance that has fundamental foundational issues (to misquote Knot but you get my point I’m sure).

Good day I think. This may be a consultation, but I think the above moves are a peek behind the curtains at the pressure that will build on the FCA to narrow the scheme considerably

As a lay person with no legal knowledge, I was encouraged by it. Their questions were based on law, not the FCA’s fudge.

I don’t think the scheme was ever going to ‘completely fall away’, but they seem to have raised and challenged the FCA on the foundational issues that should severely narrow it.

I look forward to more considered views from others on the board (meaning: get a move on Knot and Liberty2, I haven’t got all day)

There’s clearly a thrust here to query the FCA’s and Rathi’s competence. Regime change in play I wonder

Did I just hear him say that any interest under 56% equals zero redress?

WOW

There is a letter from the CEO of the FCA dated 7th October that anyone interested may want to read prior to tomorrow’s hearing.

Others can dig into the legal detail far, far better than I can, but just to say: my understanding of this is that the Supreme Court is now the legal benchmark for what counts as “unfair.” Under FSMA s.404, the FCA must base any redress scheme on what a court would award — it can’t just make up its own rules. If it strays too far from the SC ruling, it risks being overturned.

SG0912

Tbf, what do I know? But I was trying to reassure you that the measured language of an RNS does not necessarily reflect what’s happening in the background (BMW having very straight, very commercial conversations with the Treasury for example).

I read the Lloyd’s RNS as them putting the FCA on notice really.

Roll on Lords Committee hearing I think, as that should be absolute box office

I hear what you’re saying, but given the thought / safeguards that go into drafting an RNS, I thought it was quite punchy

‘The redress program is going ahead after the UK’s top court in August handed lenders a major reprieve, finding that banks should ONLY PAY COMPENSATION where the MOST SERIOUS ABUSE is found’

That feels like a real pivot away from the narrative the FCA have been trying to peddle

I really do have the anti Midas touch, up 2% since my post and long may it continue

Insert slap forehead emoji here lol

Thanks klishen.

So I guess we should expect a similar RNS from CBG today followed by a sharp drop in sp - to buy or not to buy, that is the question today. A top up is very tempting if i just keep the fundamentals in mind

I think the biggest difference between Lloyds and CBG is that CBG may be ‘in play’ and being accumulated, and Lloyds isn’t.

I don’t ever expect to get a divi from CBG; I think the US banks start reporting next week and it will be interesting to once again see the colossal financial firepower they have.

CBG is ripe in my opinion, with the management doing everything to both protect the business - but also put a nice shiny ribbon and bow on it.

If I were a Treasury mandarin charged with the task of monitoring the health of the UK’s financial industry, and I had a PM who has basically lived his professional life protecting the rule of law; I’d be putting new management into the FCA to ensure redress operates fairly and within the scope of the judgement of the SC.

The FCA has turned into a populist ‘consumer champion’ under Rathi, I suspect more for his ambitions and profile than anything else. Martin Lewis the other day saying he was getting a briefing from them the evening of the draft consultation release; then commentators reporting as if it’s a done deal. The FCA need reining in big time.

With respect , saying “we’re back to square one” doesn’t quite hold up IMO

Yes, the FCA has dropped its “£700 redress” marker — but that’s not law, not binding, and not even final. It’s a consultation dressed up to look authoritative and manage sentiment. But it directly contradicts key elements of the Supreme Court’s logic in both Smith v. Clydesdale and Johnson.

Let’s not forget:

• The SC made clear that redress must be fact-sensitive — it didn’t support blanket rules like “any tied agreement = unfair.”

• The FCA’s 3-point test ignores important legal nuance — like deemed agency, Section 56, commercial intent, and consumer behaviour.

• Several lenders (FirstRand included) have already publicly questioned its legality.

• And we’re not in a vacuum — the Lords Select Committee is watching, and Reeves’ Treasury won’t want to preside over a regulatory cluster F that damages UK market confidence.

As for CBG: they’ve provisioned £165m already — which RBC and others say is broadly sufficient — and they’ve got a £400m+ liquidity buffer in place. That doesn’t scream distress. It screams “prepared.”

So no — we’re not back at Jan-25 levels. We’re in the pre consultation game now.

The game is posturing, pressure and positioning; but the fundamentals haven’t changed.

Rick England,

I think that’s an understandable take if you’re scanning headlines, but it doesn’t really stand up to scrutiny. Uncertainty hasn’t worsened — it’s simply evolved. We’ve moved from a theoretical £18bn liability to a clearly scoped £11bn consultation with central estimates aligned to existing provisions. That’s a narrowing of outcomes, not an expansion.

As for Close Brothers, the fact they didn’t immediately provision further — despite using the word ‘material’ — strongly suggests internal models are still broadly in range. ‘Material’ in financial reporting terms can be 10–15%, as Liberty2 has already stated, not double. So we could be looking at a top-up in the £20–30m range, not a structural hole.

Yes, legal challenge is still a possibility, and yes it’ll drag on — but this is now a political and consultation issue, not a black hole of legal unknowns. Price weakness in the short term may reflect volatility and positioning more than anything fundamental.

The smart money isn’t ‘waiting 30 days’. It’s already at the table.

I’m thinking it’s perhaps the FCA that are destroying shareholder value not the CBG SLT; FCA are also putting major question marks over investment in UK financial services and that will be the CEO’s eventual undoing. I hope.

What three things would you have the CBG leadership DO exactly?

I read all your posts Knot and appreciated they are - i was looking for a sanity check as this guy is adamant that it was in the judgement and I have been challenging him today for poor journalism.

Martin Lewis has just posted as though the FCA have ruled, not going through a consultation process and as you say starting at extremes ( as i think the are the banks today). I expected more of him tbf.

Any way, all just noise but the misrepresentation boils my…