Member Info for LIBERTY2

I consider it positive to see the continued momentum from management in following through on their statements for streamlining of the business. Creating a more agile and lean entity stands to boost the underlying performance of the group.

Thanks for the update Chid.

To think, if you had invested here back in November since you have been providing cryptic doomsday essays, you would currently be sitting on a 100% profit.

Those dreamer shareholders haven't done so bad, so far.

All the best.

Possibly - the '11am Thursday' is not a hard and fast rule. I have seen it update on Friday afternoon for the following week.

Its not a given that it will be in July. Just an indication made in April.

Gary Greenwood, analyst at Shore Capital, said: "This is not a full exit from personal lines, but a significant de-emphasis.

"Overall, we see this as an initial step in the group's process to review its business lines, identify those that are underperforming and take action to either improve performance or exit them and reallocate capital to better performing businesses to drive higher sustainable returns."

Shore Cap has a 'hold' rating on the stock, although it noted there was scope to upgrade its fair value of 370p "materially" should a Supreme Court ruling and subsequent regulator response be favourable, and if the group can "put in place a convincing strategy to improve returns in the core business, of which today's announcement is a first step".

On the point of zooming out... can anybody explain a 9% rise in SP yesterday? No good reason for it in the big scheme of things.

Currently trading at £3.85, which is 2% up on Monday.

Knots favorite expression of screaming on the way up and screaming on the way down is apt.

Enjoy the sunshine folks.

The amount of ill-informed commentators here becomes very apparent at the drop of a share price.

''Seems to me they are exiting from the car public finance business.'' - assuming this is a reference to the retail motor finance business. As previously stated - this RNS has nothing to do with the motor finance arm. It is Premium Finance - finance for small insurance policies. Read whats infront of you.

Comments around manipulation - the reality is that if this was released in the days / weeks after the SC verdict it would be perceived as CBG being hard up for cash and facing a larger than budgeted cost, being forced into winding down avenues of their business, regardless of the SC outcome.

By releasing the RNS at this point they are removing that play, it is simply a repositioning of their longer term business goals for the better of the bottom line and regulatory pressures. Remember - the FCA are also looking into the Premium Finance market. As previously mentioned, this very much appears a shot across the bow of the FCA and a clear warning from Close, following one from Secure Trust and Santander in the run up to this matter.

Zoom out here, see the bigger picture.

Its a good RNS.

For fuller context consider the realities here; why would a bank want £300 loans, at an avg length of 10 months, at an average rate of 10% flat.

They are covering admin costs, broker costs, operating costs, risk costs, all for what £30 profit, possibly plus a token setup fee.

This is a sensible streamlining of a small part of their business. Any red RNS box is going to be used as a panic button.

Prime example of ‘there will be games played, especially with a short presence still active here’ this morning.

Shake a few weak hands out and I think you will see a rebound at discounted rates.

It seems a sensible and prudent move. Banks want larger balance loans, it takes the same amount of admin and work to provide a £300 loan as it does £2,400. There is also less red tape attached to commercial loans than personal.

Close will also be releasing around £400m from their personal loan book.

You could also read this as an early ‘shot across the bow’ to the FCA that Close are not afraid of change if they try to push the industry too hard on this scheme.

Secure Trust SP responded well to them pulling out of motor finance last week - lets see.

No - they are winding down their personal lines of premium finance, to focus on the commercial business.

Premium finance is where they will lend you the cost of an insurance premium for example. As shown in the footer of that RNS, the average personal premium balance is only £300, where as the average commercial is over £2,000. They are looking to drop the low return personal aspect of the lending to focus on the larger balance commercial side.

As the CEO states, in a continued effort to streamline the business, its lending and aid its profitability.

DCAs - Yes Close operated DCA models whilst they were a permitted and widely used offering. Forecasts - best to check the analyst forecasts pre Oct 2024. As you suggest, compensation around DCA models is more likely than not at this point I would think - I also believe it will be those deals deemed 'excessive' which will be subject to a portion of the proceeds being returned to consumer. In terms of the worst case scenarios which are broadly still priced into this SP, I believe this will account for a small fraction of this.

Closes Loan Book - I do not see the correlation between this matter and borrowers paying down loans in a higher interest rate environment. CBG do not offer consumer mortgages, so you will be referring to products such as their motor finance arm. In the big scheme of things, motor finance will be one of the last elements a typical consumer would choose to pay down - and lets not assume that we are in anything like the majority of the population when we are fortunate enough to be able to choose to pay down borrowings.

On a side note - I believe at this point it has widely been forgotten how this scenario came about. This matter was decided at lower courts in favour of the banks, as it largely had been historically when these type of claims had gone to High Courts. It was the Court of Appeal who totally diverted from the accepted norm, and plunged the industry / government / FCA / legal experts, into a state of shock on this. This was not an expected verdict or ruling based on foundation. It was a total departure from the accepted rule.

The SC would be effectively correcting the course of the shock, unexpected, unfounded ruling of the CoA and returning back to the accepted, acknowledged and historial guidance of lower courts / FCA / sector norms and government ethos by narrowing or over-turning.

To think that the SC would be going against the grain by doing this is misunderstanding how we arrived here.

Afternoon Stockpick,

Yea I see the logic behind your position. It appears you are basing your entire investment position around the ruling of the SC - which I can understand - but my investment was built at peak fear 6 months ago in a business I know very well, have dealt with for many years in various facets of their operations, and which I understood and value the fundamentals of, ‘almost’ regardless of the ongoing legal matters.

Can I 100% predict the outcome of the ruling - certainly not. Can I gauge the general attitudes of various governing bodies, legal opinions, informed commentators, that the CoA ruling was too far reaching and is ripe for the SC reining it in - yes I can accept that. I guess this would be what I consider the odds being in the favour of CBG here, for the specifics of the case.

So in summary, my investment here was a very long term play, I would be happy to hold CBG indefinitely, its a business I have a great level of conviction in long term. I also consider it likely that the fear has been over-done around this matter and a further progressive correction is likely in the SP over the coming months, possibly turbocharged by a ‘positive’ ruling.

You seem a well informed chap - you need to stick with your own gut, i’m not in the market to convince anybody of an unknown.

All the best.

That is one side of the coin and a valid suggestion for some.

The other side is that it ‘costs’ you 30% (don’t quote me) on the uptick to buy back in if there is a positive ruling.

Simply a question of personal conviction on which way you believe this will go. If you are also holding this with a long term view based on the fundamentals - which have only improved since November - you may also be minded to simply look past the next months news.

There is no right or wrong strategy here at this point - its horses for courses, as they say.

Yes there will be a scheduled date for the ruling in advance.

Leak / no leak - who knows. I wouldn't be surprised if the heavy buying this morning was on the back of a secretarial level nod that the verdict is being penciled into the future rulings page today. I would like to think a leak at the magnitude of a SC ruling itself would be unlikely - but perhaps thats just naive...

Regardless - we are correcting course in the right direction as the uncertainty gap reduces.

At this point holders just need to be prepared for turbulence - there will be games played and situations monopolised on, especially with a short presence still remaining.

As it can go up 8% in a morning for no immediate reason, be prepared for it to fall 8% in the afternoon, and not panic.

The future judgements page will be updated today / tomorrow for judgements next week. It states 'usually 11am Thursday', but I have seen it update within 24 hours of that in the past month for judgements the following week.

At this point next Wednesday is likely the earliest date, depending on this weeks future judgement update.

I would suggest describing this is a Binary Option is somewhat extreme. There is a lot of space between boom and bust with CBG, regardless of outcome.

Interesting - good news for CBG in terms of competition in the market. Also positive that this is the start of what the FCA feared with lenders exiting the market, lower competition = worse deals for the consumer, making a more moderate approach from them favourable internally.

Could see the case being penciled in for verdict next week on the future judgement page tomorrow.

There seems to a distinct misunderstanding amongst investors / commentators here. There is a sizeable probability that there will be 'some' form of payout here - there should not be any surprise attached to CMCs advertising this, they will likely be in a position to make a few quid.

The more realistic question is in CBG case, is it £165m or is it £165m times by x. This is what the SC decision will give an indication on, then the FCA decision will cement. There is also the possibility that there is zero payout, however I suggest this is unlikely.

There has always been a likelyhood of some compensation since the FCA opened its investigation, its just the fact that it is not going to be the ridiculous amounts being banded around by CMCs - as CONFIRMED by FCA in the most recent release.

Yes since Oct 24 the decline is due to the CoA ruling.

Yes the Nav is around 3 or 4 times greater than current share price.

SC ruling is due any time. CBG has provisioned £165m, but have built a war chest of £400m+.

Since Oct 2024, a considerable sentiment shift has progressively taken place by Government comments, FCA stance and a well presented case to the SC. Which as previously stated, is being viewed as a win for the banks and a likely overturn / narrowing of the excessively far reaching (widely agreed on both sides) verdict from the CoA.

If there is a total overturn of the ruling, I would not be surprised to see a 100% rise within a week, partial narrowing 20 / 30%, upholding of CoA verdict 20 / 30% decline, recovered over the coming months once the dust settles.

Chances, my personal view:

Overturn - 35%

Narrowing - 55%

Uphold ruling - 10%

My perspective is 90% chance of a considerable rise following ruling. With options one or two, no reason the SP will not return to £8 - £12 within 3 years, plus an earlier dividend resumption.

If in the unfortunate event of a upholding of the CoA ruling, share price will most likely decline. However, Uncertainty will be removed which is currently negatively priced in, CBG have very considerable funds set aside for this and more on tap, plus options for accessing additional if required.

All in all, at these prices its worth the chance from my seat. This is not a 20% play, theres genuine potential for multiple 100’s of % from a solid, profitable, long established, award winning bank.

Jasy - lets hope so. The tide has turned on the official attitudes toward CMCs, as seen in the responses from the likes of the FCA, FOS and wider government. I suspect their inherently damaging practices will not be common place for much longer.

Basher - I agree, would love to see that happen but I would suggest it is unlikely. The issue with the DCA model is that it did contrevene FCA guidelines around potentials for unfairness and commission disclosure. I do not see a path where there is not some sort of compensation from the DCA angle - however I do believe it will not be too excessive in the grand scheme of things.

Your points around the many variables are also true. This is something the FCA will have to 'work out'. You can liken a finance arrangement to a 'product' though to add some simplicity here, and many of those variables also applied within the PPI field, due to customer profile and insurance risk etc.

There is plenty to work out, but we will get there.