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Read the CBG release on the 3rd, CBG are saying to the FCA bring it on. Read the earlier post relating to the comments from the market call the FCA had in relation to are all market participants the same. Then consider the wording of the 3rd release and this mornings. To me they are saying they are very comfortable with the situation and what may drive CBG more in the near term is the possibility of a takeover.

The more I have read through the ruling and the FCA comments and conference call I'm very happy to sit back and watch the FCA make a comparable mistake to the Court of Appeal. The FCA have suppressed the market today, delayed it rather than changed it.

Popcorn at the ready... munch... munch...

Close Brothers Group plc and Close Brothers Finance plc

4 August 2025

Further to the group’s announcement issued on 2 August, we note the announcement of the Financial Conduct Authority (the “FCA”) on 3 August of its intention to consult on an industry wide redress scheme in respect of motor finance commissions.

We look forward to engaging with the FCA in respect of the consultation.

Source : https://www.closebrothers.com/investor-news

Reading the FCA transcript of the call with analysts and wondering why the FCA, as a market regulator, are taking questions from investment banks to indirectly advise on possible company valuations ? Do the FCA not know the regulatory remit ? Some interesting bits from the conference call :

Nikhil : " I'm going to be quite careful not to start saying something that might lead to identification of any sort of institution specific practices, but this is a highly heterogeneous market and there are very different practices across the market." - clear statement that some are worse than others

Stephen : "But the details of the scheme as we've set out and the choices that we are going to frame in the consultation" - Fraudian slip... "frame"

Nikhil : "I can't give you a crystal clear steer on a single number because so much will depend on the context of each agreement overall." - No Plevin broad brush.

Nikhil : "there are some deals that were done which were 0% APR" - Yeah, commission on 0%, how does that work Plevin style ?

Stephen : "the Supreme Court itself is clear that that simple mechanistic approach is not right" - No easy redress approach

Nikhil : "2007 to 2020 that there were 25.9 million motor finance agreements, of which 14.6 million operated with a discretionary commission arrangement with around £8.1 billion estimated commission paid during that period." - Average commission £312.

Nikhil : "One is the administrative cost of running a scheme, and clearly with something of this scale, that could run into several billion pounds" - for several £bn what are the FCA going to be doing ?

Nikhil : "I think we had an estimate of around 500,000 non DCA agreements where the Commission was above both 40% of the cost of credit and 20% of the loan amount" - likely highly focused on certain banks.

Source : https://www.fca.org.uk/publication/transcripts/motor-finance-market-analyst-briefing-august-2025.pdf

Wide awake bored popcorn... munch... munch...

The Plevin 50% keeps on getting quoted when the Supreme Court ruling made no mention of any specific level that made a relationship unfair even after referencing Plevin. In Johnson case [306](3) "The agreement guaranteed the dealer a commission which amounted to 25% of the total sum advanced."

Nick, interesting posts.

[297] "The test of the unfairness of the relationship of debtor and creditor is stated in general terms which permit courts to take account of a very broad range of factors. The application of the test in each case will, inevitably, be a highly fact-sensitive exercise (see Plevin v Paragon Personal Finance Ltd [2014] UKSC 61; [2014] 1 WLR 4222 (“Plevin”), per Lord Sumption at paras 10 and 29; Smith v Royal Bank of Scotland plc [2023] UKSC 34; [2024] AC 955 (“Smith”), per Lord Leggatt at para 22)."

That "highly fact-sensitive exercise" might give the FCA 'slight' issues on the wide range of contracts.

The limitation of claims issue in the Canada Square case was an equivalent to a 2000% commission (5% of the 'premium' went to the insurer) and a long way from the lower levels in motor finance. That case appeared that the commission on it's own was clearly unfair - read the Johnson specifics in the ruling because Johnson case required more than just the level.

Popcorn at the ready.... munch... munch...

Forgot to add another rabbit in the headlights comment from the FCA, which reads like amature hour at playschool. "A total cost midway in the range, as forecast by some analysts, is more plausible."

"as forecast by some analysts" - This is comming from the FCA who have been looking at the issue for years and have thousands of claims documents in detail and have been talking to lenders, brokers, etc. And yet they rely on "as forecast by some analysts" ? Really ?

You really think the FCA know what they are doing ? This may end up in a judicial review and the FCA broken up by the government before then.

My guestimate is now 90% that the head of the FCA will be (resign due to ......... reason) before the end of the year.

Unbelievable popcorn.... munch... munch...

Not really surprising that certain posters are rather upset at being caught so short and then mirroring Goseph Goebels. Quite funny. Poke a bear and you continue to get a response. From the Batman movie "Some people just want to watch the world burn"

How many people on here (one or two ?) have actually read the 110 pages of the ruling and I would also bet that very very few of the media have read anything other than the press release ?

The FCA can't do anything before the Barclays case is heard and ruled, which was originally won by the FOS assisted by the disinterested duty in the court of appeal ruling that the Supreme Court just overruled, effectively making the FOS ruling unsafe.

The Johnson case was ruled that only the commission was repaid and not the interest as well, which the CoA ruled. Also due to multiple factors and not just a simple one issue the FCA would like.

The FCA have likely focused on [329] "The failure to disclose to Mr Johnson the existence of the commission was a breach of CONC 4.5.3R" - however it was indicated earlier that the documentation contained errors [320] in directing to the commission clause pointing the consumer to cluase 10 (data protection) instead of clause 13.6. Without this documentation error or different position and wording, it may well have been quite different. The undisclosed commercial tie (first refusal) to First Rand was also a factor. The disclosure was not on it's own unfair [320] "the mere fact that there has been no disclosure of the commission, or only partial disclosure, will not necessarily suffice of itself to make the relationship between lender and customer unfair for the purposes of the CCA. It is a factor to be taken into account in the overall balancing exercise required under section 140A."

Why nobody has picked up on the FCA rabbit in the headlight error of "The FCA currently estimates that most individuals will probably receive less than £950 in compensation per agreement." where an award of £950 for an average car loan would be half the Johnson commission.... does nobody see the interesting point here ? not 55% rather circa 25% and then reference to context of paragraph [309] in relation to [316].

As usual just my guesses.... I'm not a lawyer, etc. I expect a bear short flurry to try and bury this post. lol.

£3.25, £4.50, hillarious.

Getting the extra comfy chair ready for the morning popcorn... munch... munch...

In terms of a dividend, I'm on the very pesimistic (optimistic long term) side as to any short term bonus type dividend because it does not fit at all within the CBG ethos of borrow long lend short type mentality. They do have a share obligation for the employees and around 1.5m in treasury, which could be cancelled at market price quite easily, although that is a drop in the proverbial ocean. Share buyback or contingent bond buyback more likely, which will do more for the share price than a dividend.

Why people are after dividends rather than a share price increase I'm always very puzzled because your only being given your own money back at a discount to what it could be in the future. Not great for the company reducing the capital base.

Looking at this pragmatically, they were building a £400m buffer (with this years divided as well don't forget) and then ended up selling Winterflood and the Keg business on top of that. So they have a circa £500m capital buffer on the books with a market cap of £600m on Fridays close and a net asset value of over £1.8bn with claims that I'm guessing will be sub £50m and a potential for CMC recovery £10-20m (pending TMS case).

Then factor in the 4.8m of short overhang on the shares, which I'm figuring is somewhere around 100-150p on it's own, however some of that I'm also guessing will be hedged and not susceptable to the Monday madness of forced buyers who punted on a crash.

The FCA, given they are intending to comment before Monday's market opens to me says they FCA will not have a redress scheme as such because it will need to be on a case by case basis. Nikhil Rathi as the current head of the FCA, I'm wondering in Polymarket has any odds....

Factor in the vast majority of the uncertainty has been removed, which was instigated back in 2021 when the share price was around £10 and CBG was a less well streamlined business (now minus CBAM, Winterflood, Kegs) and it's possibly now a very attractive takeover target north of £10.

Gap at the open would need to be a minimum of £1 to make any sort of sense to the current valuation, so the opening auction may be delayed some time and the market may get halted once or twice once it starts. Close in my mind is closer to £7.00 range with an early morning possible spike that may touch £9.00 on the offer side being lifted by forced buying (retail max £7.50 ish).

That's based on my thoughts around the FCA not having room for a redress and a possibly that the FOS may back out of the court case later in the week and concede the case to Barclays, which will give another bump as the vast majority of uncertainty is then removed. Judicial review, no chance.

Look at the chart as to the discount CBG is at on a percentage basis to the other banks and the price needs about a 70% increase to recover to end of 2023. Just my guesses. -uncertainty -bribery -fiduciary -redress +capital +counter claims

Bribed with half secret fiduciary popcorn... munch... munch...

"we will consult on a redress scheme before markets open on Monday 4 August" - So, the FCA may have also have concluded that the Barclays case is likely to be ruled in Barclays favour against FOS and that individual cases need to be processed on a case by case basis and there is no legal remit for redress scheme as such ?

Quite an interesting contrast from the "weeks" perspective they initially considered. My guess is they have zero chance of a redress scheme and this is the FCA abandoning that route. Head of the FCA will likely be the next regulator head to be fired.

Monday is going to be fun to watch....

Such is popcorn.... munch.... munch...

So, with the interesting comments from the Supreme Court ruling it would appear that a number of the claims companies may now face a difficult time ahead if a court case ends up ruling against them. The pending High Court case of Vanquis Bank vs TMS Legal in relation to 33,000 claims, some of which were claimed to have been "poor-quality", where only 14% were accepted by Vanquis (10% upheld by FOS) creates a potential to leave claims companies with multi £m in charges from the banks. The comment that was made during the livestream in relation to claims being submitted after the Court of Appeal ruling was challenged creates an interesting situation in relation to this pending case. That may see a number of claims companies facing a decision to hold out for the small DCA cases that align with Johnson against a possible far larger counter claim from the banks.

The Barclays judicial review against the Financial Ombudsman Services on intertest rate commissions poses a different challenge to the FCA hopes of any type of easily structured redress scheme because the FCA may not have enough information to make a view as to the number of claims that would be valid. The FOS also relied on the dealer owing a duty (rested on CoA case) which was just thrown out by the Supreme Court. That would look like Barclays will now win their case against the Financial Ombudsmand Service, however it could then end up going to appeal to the Supreme Court if the FOS tries and is granted, which would place it into 2026. The Barclays case still needs to go ahead before the FCA can hope to organise a redress scheme, which the FCA should have known but ignored.

In terms of Monday, bear in mind that there were around 4.8m shares short in the market for CBG on Thursdays close. How many of those were closed out on Friday we will not be known until after Mondays close. What we may see on Monday is a very short duration spike in price that may reach a 'high' level before falling back as open shorts blow through limits and are closed out. The peak of this spike may give a guide as to where the price will end up later on, although it may be pushed by offers being lifted (forced position close) in the market and the bid (available to retail) may well lack any reasonable volumes to sell much. The spike may be more of a price guide as such. The first five to ten minutes may be brutal.

Otherwise, good weekend everyone, popcorn as always.... munch...munch...

Not an expert, not in the slightest.

No fiduciary and no bribery - two of the key issues I raised as the root flaws in the Court of Appeal judgement.

Johnson is more inline with a Plevin type event, however the payment was the full commission and not the excess above 50%. Would have to read the fulld judgement again to differentiate, however the judgement seemed to make it clear that it is on a case by case basis and not a one size fits all.

Separately all the claims companies now far armageddon.

Lloyds swung 5% already.

Popping away.... munch...munch...

Pop, pop, pop, pop, pop, pop, pop, pop, pop, pop, pop

Popcorn time... munch... munch...

At a company I worked for there was a game of spoof we used to do with new graduates to teach them some aspects of trading. One time I thought I would just break the whole game just to make a point and ran the spoof market up like crazy, at which point they assumed I knew where the price should be and all followed like sheep. The point at which I collapsed in laughter and the utter confusion on the faces was priceless.

Beware of following a trend you have zero factual knowledge about.

Popcorn pending.... munch.... munch...

Was going to sit out with the summary but had to post this one, Millennium closing out some of their short yesterday with a reduction of 0.08% or around 120k shares. Trimming risk or realising the odds have changed ? Bailing out when shorts are closing out never looks good.

End of day auction today with very little (7.2%) volume (62k) given the expectations and the price movement. The range 396-397p (2p) showing 35% of the volume as support kicked in with the elastic stretch down to 390 range that snapped. Conversely the 409p up (22%) showed a possible resistance point on the other end of the scale in the days move. Between them, that rounded sticky, magnetic 400p figure.

What a day for popcorn... wait till next week.... munch... munch...

The FCA can't instigate a redress scheme that is outside of the law. The FCA rules, which everyone (who matters) followed, do not form the basis for any sort of redress scheme if companies were following those rules. The Friday ruling is part of the legal question, where aspects around civil bribery were breached or in the case of Johnson and Wrench that they were unfair from a consumer credit perspective (in the context that credit cards were charging double or tripple the rates they bought a car for).

The principle of the argument gravitates around the perception that the consumer was wronged because the wrong person recieved a larger slice of the same pie than expected. If all of it was interest with no commissions, no problem. Same pie, arguing about who recieved a slice.

Barclays case is on the basis that Barclays had a base minimum interest rate of say 3% and then the broker charged 4% whereby the broker gained the 1% as commission. The FOS in the Barclays case says that Barclays should have only offered 3% and the broker get's zero commission. Then figure out how competition is supposed to work in the future bearing in mind the argument is all about who gets a slice out of the same sized pie.

In my mind you ahve to look at the cases in the wider context as to what goes on in consumer finance and what rates consumer finance are charging, commissions, etc. and there are no objections (buy now pay later higher rates, credit card interest rate levels, extended warranty secret commissions, etc.) and then wonder if the motor finance is a test bed or an outlier that just does not fit well.

One day's popcorn awaiting... munch...munch...

When the SC was heard and July was given as the indicative date for the ruling it would have made sense to see what the option price was for say 380-400p calls, which would have been way out of the money and only with volatility being high that they may have had a higher premium. Where those options are calendar based then this Friday is the last trading day to defend against them, if they are in the money.

Conversely 300p puts for example may have been traded as well under the perspective that the SC was always going to create a stochastic gap from it's last traded position on Friday. When CBG was trading at say 300p, July calls for say 380p could have been 15-20p, which would make 400p the point at which it moves into a loss for the seller of the calls (premium+strike).

Options like this I suspect are what has created various sticking points for the share price along the way and today and Friday will be possibly driven by these options, not fundamentals (based on guesses). Conversely August may have been lighter on the option side or heavier, depending on the difference in time value and volatility and it could be that August positions are actually being defended against from a pure delta hedge option book. Options when hedged just trade, irrelevant as to whatever is in the news.

Just for a different perspective, after the last 6 months of trading, CBG and LLoyds are trading within 1% of each other. Spread trading Lloyds and CBG would have been a reasonable strategy over the last six months. However when you look at the shares on a 1 year basis then CBG has to gain over 50% just to catch up with the banks revaluing closer to book value. The court uncertainty is around 20-40% of that discount in my view, which some or all is removed over the weekend. Don't forget the Barclays case, the FCA can't redress if it is still pending.

Do your own homework and make your own mind up and get some popcorn in.... munch... munch....

In terms of the reasons for the short positions holding, three of them look like they are just hedge positions and could be against offsetting positions in other banks, claims management company funding or whatever the hedge is against. One of them is actively day trading and helping prove the IG disclaimer "69% of retail investor accounts lose money". They do not appear to be pure speculative shorts. They also seem to lack any delta hedging against which would be seen against derivatives on the other side of the short (e.g. calls or puts). They are a mix of reasons and one of them is likely making a nice return out of that 69% of retail.

Do your own research and think, then wonder if your one of that 69%. As Warren Buffet said "The stock market is a device for transferring money from the impatient to the patient,"

Popcorn again... munch... munch...

"£9 in two years I agree with ….But Friday any where over £4 would be exceptional …."

You do realise how completely illogical that statement is don't you ?

Sitting and watching the chaos with popcorn as usual.... munch... munch...

Watch the correlation with Lloyds as that will give a guide as to when the elastic will snap the shares back, otherwise just sit back and wait for next week. If Lloyds is trading in the opposite direction or not moving it's just people playing with CBG in the interim flushing people out.

Remember that Friday removes uncertainty, regardless of judgement and the market most dislikes uncertainty above all else, so go figure what will happen on Monday.

Rollercoaster popcorn, scream on the fall and scream on the rise....munch...munch...

"The CoA also erred in not remitting "unfair relationship" claims under CCA s.140A to lower courts for fact-finding, overstepping its appellate role."

...

"The LIBOR ruling reinforces a broader judicial principle of restraint: higher courts should avoid substituting their views for those of the appropriate fact-finder unless the law clearly demands it (e.g., pure legal errors). In the motor finance Supreme Court appeal (heard April 2025, judgment still pending as of July 28, 2025), lenders could leverage this to argue the CoA's failure to remit was an equivalent overstep, denying a fair process."

"The CoA's broad imposition of fiduciary duties and invalidation of consent relied on generalized assumptions about consumer vulnerability, without remitting for case-specific evidence (e.g., individual claimants' knowledge or reliance).

This could be portrayed as the CoA "directing" outcomes like a misdirecting trial judge, rather than allowing lower courts (as civil "juries") to weigh facts under corrected law.

If the Supreme Court agrees, it might quash or limit parts of the CoA ruling, remitting unfairness issues and emphasizing appellate limits, much like how LIBOR restored jury primacy."

Grok4

"UK law, as reflected in the Court of Appeal's October 2024 motor finance ruling (Johnson v FirstRand Bank Ltd and conjoined cases), does not strictly apply a "singular rule" in the sense of a one-size-fits-all mandate oblivious to client differences. Instead, it establishes general principles—such as the existence of a "disinterested duty" (to provide impartial information) and, where applicable, a fiduciary duty of loyalty—that are applied flexibly based on the specific facts of each case, including the buyer's sophistication. This approach draws from established precedents like Medsted Associates Ltd v Canaccord Genuity Wealth (International) Ltd [2019] EWCA Civ 83, which indeed differentiates between sophisticated and unsophisticated clients: in Medsted, experienced investors did not require detailed commission disclosures because there was no vulnerability or reliance creating an expectation of undivided loyalty. In the motor finance context, the ruling emphasizes the typical asymmetry where consumers are often unsophisticated and reliant on the broker (e.g., a car dealer arranging finance), leading to duties arising from the broker's structural role as an intermediary with superior knowledge of lender panels and terms."

"However, the judgment explicitly leaves room for variation: liability for breaches (e.g., via undisclosed commissions) depends on factors like the customer's circumstances, knowledge, and whether informed consent was obtained. For instance, a highly knowledgeable buyer (e.g., one with expertise in finance laws) might not trigger the same level of duties if evidence shows no trust or reliance was placed on the broker, or if minimal disclosure suffices to inform them of conflicts. The court's reference to "unsophisticated customers" is described as "unclear and undefined," implying courts can—and likely will—differentiate in future cases, preventing a rigid application."

Grok4