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“Worst case scenario” averted for banks, analysts say

Banks appear to have swerved the worst of the financial impact of the car finance scandal after the Supreme Court rejected the majority of claims in a landmark case today.

Gary Greenwood, an analyst at Shore Capital, said: “The broad read across is that the extreme scenario of fiduciary duty and bribery have been rejected - therefore the worst case scenario is off the table for the banks.

“It allows the FCA to come up a redress plan that only punishes those that need to be punished. It’s a positive impact for Close Brothers in particular.”

*goes to short CMC's*

Mecon - I missed the bleeding ruling as the stream did not work for me. However due to the finding of a commercial interest throughout for the dealer, it would not be relevant.

What a bloody fantastic result - well done guys - enjoy your weekend!

That would be excellent - keep the updates coming - my live stream is not loading!

Lloyds NYSE responding well

Great timing for a Trump related dive across the board - Donald at it again!

So in terms of what we are hoping to hear tonight - here is a brief run down from my perspective:

Ideal case - full overturn of CoA case; no fidicuary, no bribery, no unfairness, no case. (possible, but less likely imo)

Middle case - partial overturn of CoA; no fidicuary, no bribery, possible unfairness in cases of no disclosure or excessive commission amounts (nuanced ruling perhaps) - have to take the CCA route = lower liability, '£165m will likely suffice' I quote RBC analyst (most likely outcome imo, would limit banking sectors expsoure considerably + prevent contagion)

Worst case - uphold CoA ruling; potential intervention from Government due to banking sector costs and contagion into other areas of economy. (least likely imo, as also concluded by the legal brains of this nation / abroad)

Worth noting that if unfairness is found based on non disclosure alone, not just excessive amounts (middle case), CBG will have updated commission disclosure practices several times since 2014, so this would not be a wide spread liability.

Time will tell.

Its MMs hedging their exposure. They don't want to be caught on the wrong side of which ever way this goes next week.

30,000 / 10,000 volumes with buying pressure over the Ask price coming through with no upward momentum. 50 share volume transactions with a 1.5% spread on a stretched down Bid price pulling the floor back down to £3.89.

Just got to roll with it.

I can't recall where exactly I watched the live streams in April - did they just appear on the Case Summary page below when they went live?

https://supremecourt.uk/cases/uksc-2024-0157#watch-hearings

I hear you Stockpick - I wish you luck here and elsewhere.

Does anybody have prior experience of where the Live Stream feature is on the SC website? I have checked on there and Google to no avail. A link may appear on the page nearer to the time. Could also be the Youtube page below, no mention yet -

https://www.youtube.com/@UKSupremeCourt/streams

Morning Stockpick,

for the sake of conversation, I don't necessarily agree with that.

Earlier in my 'investing foray', I for one have certainly felt 'FOMO' when sitting on the sidelines with no vested interested and have invested at prices I shouldn't have, likewise I have felt the fear element when looking at a SP declining and not got in, when with hindsight that was the exact time I should have been brave - no need to quote Buffett here, we all know it.

Human emotions are a very powerful thing. I do believe that a lot of people trade far too much, which is ultimately what costs most PIs money. Its the emotions which are forcing them to trade, when more often than not they should just be sitting their hands.

I have learnt what works for me is to truly detach from the monetary aspect of the investment (easier said than done) and simply view it as a rational part ownership of an entity with a longer term view based on whatever fundamental view I concluded prior to making said investment. I will of course still have bias or emotions ticking away, but I make a point not to study the £ signs on my investments more than I need to - its these moving £ signs which make us do silly things, whether invested or not.

All the best.

There has been pretty low volume across the week, considering the event it is concluding with. No significant visible moves from Institutions, just some tweeking on the shorts that we can see. Most of the decline seems to have ironically been aided by a couple of sizeable positions within this forum, coupled with the £4 number proving to be sticky for interest possibly from underlying options and MM incentive.

Humans are often full of confidence right up until the moment it comes down to it, and their primative fear element clicks in their brain - on a psychological level this was always going to be the way 'decision week' was going to when forewarning was provided.

Enjoy your day folks.

Absolutely - love fundmentals, thats it.

Sure, but its missing the point of what I was attempting to say. Don't trade on emotion, good or bad, regardless of this its for £100 or £100,000. Whatever trading style you wish to employ is no concern of mine.

All the best.

I would urge anybody who is holding, or not, to view all information calmly and reasonably - thankfully the SC has been prudent and allowed this time. Both the spikes of emotions good and bad are when investors make poor judgements and either lose money or lose opportunity.

There are people here who sold out at low £3's, for a small time return based on the good emotion of an uptick, which is fine. I can imagine they have been kicking themselves since.

There will be people here who sold out on a couple of the 20-30% daily declines CBG has seen since I have been holding, based around speculative news or wider market issues. I also bet they are kicking themselves now and wished they had just been patient.

Likewise there are also those who have sat this out entirely for 8 months since £2. There genuine mindsets beneath the surface, well thats obvious.

Have a clear objective - if you are long, expect to be long for 3 years plus, here or anywhere else you are invested. If you are buying to sell next week, you are in a tricky spot and will most likely fall prey to emotions, good or bad.

To this point - CBG has shown the market, not to bet against it. Regardless of the moves on Monday morning, up or down, it will get better...

Fair Value - subjective at this point obviously. Based on underlying Operating Profit in H1 2025 (aside from the one off provision), and using 2024 figures as a full balance sheet, fair value would be in the broad region of £5.50 to £8 taking into account provision. If management succeeds in delivering on their targets (which I believe they will), and the £165m provision is sufficient or close to it, this figure lifts upward over the next months / years.

How to hear outcome - probably live streamed on SC website. Full judgement will be uploaded at this time or shortly after. CBG RNS Monday 7am, I would imagine.

As has been discussed here and pointed out by the analysts following this - the timing is indicative of expectations the market will move (up or down), they do not want anyone profiting from this without allowing the banks involved and wider sector an opportunity to digest, understand and respond.

Understand that the SC are delivering a concrete verdict which will confirm a likely multi billion pound scheme (as anticipated). It is not in their remit to assess if one companys share price is reflective of this or not, or if shareholders are going to celebrate or cack their pants.

All they acknowledge is that they are potentially paving the way for a very significant cost for the sector, regardless of whether this is ‘priced’ in.

Financial Times article - estimated compensation costs give significant downgrades by analysts in light of widely viewed guidance that the SC will narrow the CoA. ‘’The must unlikely ruling would be that the SC uphold the CoA judgement’’

Also found it incredibly interesting the comment from HSBC, whos £44bn compensation estimate made many months ago set the doomsday headlines for this matter:

‘’HSBC last year estimated the car finance scandal could end up costing lenders £44bn, including about £10bn of administrative expenses. The bank said this week that the analyst behind that forecast had left and it was no longer “looking at the issue”.’’

https://www.ft.com/content/85fa5bd3-50ae-44c8-bae1-7dcb60685f9c

FCA and SRA aiming for the CMCs as expected in their bad practices and misleading customers - more to come on this one I am guessing….

https://www.sra.org.uk/sra/news/press/car-finance-warning-july-2025/

Feeling good. Enjoy your day.

Yes you can purchase options on UK stocks, CBG included. Me and you may find it difficult to find a broker who offer them. The bigger boys have simple methods.

As for their usage on UK stocks, comparing to US, I do not know to be honest. I would imagine US stocks have 'more' of everything frankly.

The reality is that a stochastic event, such as the SC ruling for CBG, is the time that options would be heavily used, and a strike point of a round number such as £4 would be common.

It would appear £4 is a significant strike price for options contracts in the background, which would make sense. Looking at the minimal volume which is moving it around this level, I would think the MMs are working to keep it here until next week.

The closer they are to a strike price, the less they payout.

I should rephrase that to - if the SC rules in such a way that it limits the parameters… the market will have a very good idea on Monday of the predicted redress liabilities the FCA choose to implement in a few weeks following.