Member Info for LIBERTY2

To be clear - Clydesdale v FOS has concluded. The verdict in favour of FOS stands, currently. Barclays withdrew from the appeal to the CoA in September.

Knot is suggesting the verdict of Clydesdale v FOS will be retrospectively challenged as part of a JR of the scheme as a whole, if the lenders decide to take this the legal route, amongst other elements they will likely challenge such as the schemes deviation from Hopcraft / Johnson / Wrench.

The High Court who will be the first court to hear a Judicial review cannot formally overrule the current verdict in Clydesdale, but it can choose to decline to follow the previous ruling, setting it aside. It would be for the CoA or SC to formally overrule it.

Its all very hypothetical. I would argue impossible to attach a realistic timeline given the moving parts.

I am personally on the side that this will not reach court. I feel the Bluecrest experience is a stinger for the FCA, and thankfully for them it is not a matter in the public eye. Will they really want to head the legal route with 40 lenders on a scheme which even to a layman is troubling legally? Doubt it. I agree with previous comments that a step down at this point is a much cleaner route for the FCA. Who knows.

It will get sorted out - it always does in life.

I've said before, this is a short term distraction. Perhaps that is underplaying it, but it will pass, and CBG will continue to do business. The topic of conversation will be the actual bank one day, which I look forward to.

All the best.

RNS continued below - I am waiting for an RNS from Vanquis, would expect a significant hike there, if there are any VANQ holders here.

***

Barclays is committed to providing fair redress to motor finance customers who have a valid claim against CFSL for loss. We are however, of the view that the scope of the scheme and proposed approach to redress outlined in the consultation paper do not accurately address actual loss (if any) suffered by customers and do not achieve a proportionate or appropriate outcome. Barclays intends to make representations to the FCA accordingly, to review the FCA's response carefully, and take such other steps as it deems appropriate to achieve a fair and just outcome.

Barclays increase provision by 260% - singing from the hymn sheet - see their RNS for full pushback. Puts a hole in my cynical thoughts related to Barclays exposure. The team gets stronger - hell of a fight for the FCA here.

***

Following the publication of the Financial Conduct Authority's ("FCA") consultation paper CP25/27 on a proposed Motor Finance redress scheme on 7 October 2025, Barclays PLC ("Barclays") has reassessed its provision for this matter as of 30 September 2025.

Barclays and Clydesdale Financial Services Limited ("CFSL") (a subsidiary of Barclays) recognised a provision of £90m in their respective annual reports and accounts for the year ending 31 December 2024. This provision (which was reassessed as at 30 June 2025) was determined based upon the information then available and estimated the potential impact of remediating any complaints CFSL has received and might receive relating to motor finance commission arrangements.

Taking account of the proposals set out in the consultation paper, Barclays has increased the provision recognised by Barclays and CFSL from £90m to £325m. The additional charge of £235m will be recognised in Barclays' Q3 2025 results and is estimated to reduce Barclays PLC's Common Equity Tier 1 (CET1) capital ratio by approximately 5 bps. The charge reflects the increased likelihood of a higher number of motor finance cases falling within the scope of the scheme contemplated by the consultation paper (which covers all discretionary commission arrangements), the FCA's proposed approach to customer engagement, and the likelihood of a higher than anticipated level of customer redress reflecting the FCA's proposed methodology for the calculation of redress, which is less closely linked to actual customer loss (if any) than previously anticipated. Barclays ceased lending in the motor finance market in late 2019, and the above estimates follow the FCA proposal that historical operations from April 2007 fall within the scope of the FCA redress scheme.

Barclays notes that the final terms of the compensation scheme remain uncertain pending responses to the consultation paper and publication of the FCA's Policy Statement and final scheme rules, which is currently expected in early 2026. Accordingly, the legal and regulatory outcomes and the nature, extent and timing of any remediation action, if required, remain uncertain. The ultimate financial impact could differ to the amount provided, which represents Barclays' reasonable estimate of the cost of redress based on the information available to Barclays, including the proposals as set out in the FCA's consultation paper, and applying a probability-weighted outcome that considers a range of possibilities.

SEE RNS FOR FULL DETAILS

Some objective news for those who have not dug it out:

- Moodys downgrade on CBG this week. Similar thesis to Fitch, FCA overhang main contributor, low RoE, economic cycle etc. Will review when motor redress resolved, management show improved metrics going forward.

Likely a contributor to underperforming peers past few days.

- Institutional Ownership now stands at around 87%. The highest on record for CBG that I can find. Around 6 months ago it was approx 70%. It seems the II’s are ‘transferring the wealth’ from the small guys to the big guys in a pretty predictable and consistent fashion. Make of that what you will.

Wow, wouldn't like to see what a 'hello' would get you.

It would appear emotions are running high once again - history tells you that tends to be the time to buy.

See you upon some conversational news folks.

Knot - valid thesis, appreciate your time.

Sabrage - around 40, multi-billion pound lenders involved in this scheme. One would expect they have every angle of this matter covered with their legal expertise.

Correction ‘sufficient legal clarity from SC…’

Knot - on the matter of Clydesdale / FOS.

Given the time to reflect, why do you feel Barclays dropped this case if in your view it was a winnable one?

At the time they noted ‘sufficient legal clarity from FCA, lack or desire to complicate that landscape’. How does this translate to you?

The sceptic in me sees Barclays minimal exposure to this, compared to their peers and wonders if they did consider it a winnable case, have they dropped it simply to cost their peers more.

Secure Trust also adjusting their provision this morning, with the same rhetoric about FCA over-reach - I noted in August a sceptical outlook on STBs provision relative to CBGs at the time, hence the lack of surprise at a 300% addition today.

Its frankly implausible that the scheme pass in its current guise. The only question is whether it is trimmed enough during consultation to bring lenders on side, or whether it goes legal thereafter.

I wouldn't expect a great deal of public information regarding the Consultation to play off now until perhaps when the final scheme is tabled early next year. Perhaps some peripheral news reporting, or lender / officials meeting. I have my own view on how this will conclude, I am convinced the scheme will be narrowed on the grounds discussed, certainly on the unfairness test, and indeed perhaps more aggressively than I am accounting for.

That aside, looking at this from an overview perspective, its very unfortunate that this FCA induced saga has become the only conversation piece for CBG. A stalwart of the British banking landscape, 150 years of history and consistently profitable business through wars, empires and revolutions. We have moved well past the fundamental threat to the business that the CoA posed, I am very much looking forward to the day we can also move past this short-term FCA distraction and start discussing the fundamentals of this great business for the next few years.

This will be sorted out one way or another. I am very comfortable with the provision that has been made with the now clear goalposts that CBG has to use for its calculations. When considering the 'scheme in its current form', the provision amount aligns to the approx market share and other basic metrics. If more is required, there is plenty on tap. If less is required, it gets thrown back onto the millions pile. End of the day, it is a short term event in the lifespan of this great business, that I will look back on in 5 years and chuckle at how many words was spilled over it, and I will wonder what Nikhil is upto as he hasn't been heard of since 2026.

Between life’s extremes lies logic; beside logic stands reality.

Will take a back seat for a while until some conversation worthy developments come up.

All the best.

Morning Knot - a very solid point.

Goes back to my thoughts on the purpose of these early ‘meetings’ as far as the Committee and lenders are concerned - find the cracks, get it on public record.

SG - what 'outcome' were you hoping for from todays meeting? Personally I enjoyed the contrast in discussion and challenge between this Parliamentary appearance and the previous one which was infront of a set of thick, ill-informed MPs.

At no point were the FCA going to roll over on their proposals, not least publicly a mere one week after setting out a 360 page document supporting them.

The panel pressed a fair number of the unfounded elements of the scheme, such as time-bar, definition of unfairness, how they arrived at 35 / 10, actual consumer loss, SC judgement not aligning, to name a few. The FCA have a well-rehearsed defence as to why their proposal is so, although they did amusingly trip themselves upon a number of occasions, which I would suggest will come back to haunt them during the consultation with the lenders - this is ultimately the roll of these meetings as far the Committee is concerned early in this consultation process, find the cracks. Only so much can be discussed in a 90min slot, let the 6 weeks of intense consultation with legally represented, multi-billion pound lenders resolve the differences.

What felt very apparent to me, as was also clearly stated in the FCA proposal document, is that they are willing to negotiate to get this passed - they have followed this tactic throughout. They will absolutely know that parts of the scheme may not stand up to legal scrutiny if pressed hard. They have set their line in the sand, and for my own judgement, I am convinced the final scheme when it is proposed next year will have redefined parameters, certainly around the 35 / 10 unfairness test which as this number edges up, for example 40 / 15, will have a vastly disproportionate affect on limiting the redress associated with it. The time matter is clearly incredibly contentious and looks to be ripe for narrowing, possibly 2010 / 2014 on practicality or statutory grounds. They were also taking a barrage of challenge on the onus being lender facing for dis-proving 'concealment', the panel considered this to be the consumers obligation in law, this may shift.

There is all sorts of areas where this scheme will be nipped away to produce a more 'proportionate scheme which reflects actual consumer loss', as the lenders are currently stating.

An interesting, and informed, watch indeed.

First point - 'Why was the CBG original estimated provision £165m, how did management get it so wrong'? Well this requires a larger objective view spanning 2 years which some may find difficult. Now that we have detailed information within the FCA report it becomes quite clear. Lets go back to the start for those who require it:

- FCA launch investigation into DCA practices - Jan 2024

- CBG asses their DCA exposure and start to plot numbers quietly, no need to provision yet, but they do start building a £400m war chest - diligence

- CoA throw a spanner in the works - Oct 2024

- SC appeal granted

- CBG officially provision £165m 'probability weighted scenarios' - Feb 2025

- SC victory

- FCA release proposed scheme - Oct 2025

- CBG increase provisions

The probability weighted scenarios is the key. As far as CBG are concerned in Feb 2025, there is an FCA investigation into DCA, and they have an upcoming SC court date. They fully expected to over-turn the Hopcraft ruling at the SC, as did most of the wider market, barring some bears on this forum. They will have also assumed that the FCA will push ahead with a DCA based redress scheme, not an expansive one with totally new elements of unfairness never before known to the market. If the FCA had kept specifically to DCA elements only, the £165m provision would be bang on, going by the FCA report numbers.

Instead, the FCA has taken an expansive view and thrown in additional elements, invented two additional tests for unfairness that do not currently exist under the CCA, CONC or law. How can you expect CBG to provision for this? Hence the rhetoric coming out of the banks over the last few days and the inevitable battle ensuing under consultation and possibly there-after.

This also goes to suggest that the current provision is based on very clear goalposts now, not totally blind guesses as to what a scheme may or may not look like, as has been for 2 years - you would expect this £300m to be a fair assessment.

You are undermining your own investment decision complaining daily about management - these guys control your fate to a large extent, if you really have no confidence, liquidate your holdings and move on.

Second point - 'CBG dividends delayed by 2 years'. Why? With the increased provision CET1 stands at 13%. Management medium term goal for CET1 is 12-13%. Business continues to generate around £140m per year in underlying profit. Under normal circumstances this increases CET1 by around 140 basis points annually, if earnings are retained. Provision could be increased by £140m in the next 12 months and CET1 would still remain at 13%. No reason for dividends to be suspended long term under the proposed base case when accounting for management goals.

I would welcome some more fact based and analytical discussion here, the shallow ill-informed comments or 'gut' based suggestions are unengaging unfortunately. They simply continue to highlight the lack of

So pretty much a linear increase alongside Lloyds.

Interesting to see the practically identical wording. Coordinated resistance across the industry it appears.

State of play now is we have a baseline scheme from the FCA, with lenders producing provisions around that. One would expect some form of scale-back during the consultation, or subsequent legals if deemed necessary, potentially reducing exposure.

With time, the market should appreciate the liability falling well within the buffer CBG have built. This is the first time that a scheme / provision have been made alongside each other since the FCA opened a a review back in Jan 2024 - ‘uncertainty diminishing’.

Enjoy your day folks - the shows just getting started.

A brief legal summary from Slaughter & May on the proposed scheme for those looking for a qualified legal opinion on the matter, link below + concluding paragraph which tells you what you need to know…

https://www.slaughterandmay.com/insights/new-insights/fca-publishes-motor-finance-redress-scheme-consultation/

*While a sense of proportionality has been demonstrated in relation to some aspects of the redress calculation (particularly for arrangements that fall short of the characteristics of Johnson and in the proposals for interest), there are many areas in which the scheme proposed is extremely broad, with limited or in some cases no justification. In particular, the FCA provides no justification for how it can mandate a scheme extending prior to the time of its regulation of the market (which is not on its face permitted by the Financial Services and Markets Act 2000), and limited justification for why all undisclosed DCAs and tied agreements should be presumed unfair. These aspects, combined with onerous expectations around the timing for implementing and delivering the scheme, will draw strong responses from industry.*

Slaughters could well be called upon again for bank representation in the courts if the FCA do not concede their flaws.

I look forward to it - accumulation if it happens.

All the best.

I will note that my comments and thoughts are simply that - I am not a legal expert and do not possess a crystal ball. No money should be placed on my opinions and everyone invested here should be personally educated on the realities themselves from non-biased factual resources.

And to be objective on the CBG statement - CBG have simply followed their obligations to the letter with regards keeping the market informed. The decline recently is based on the FCAs over-reach, the banks subsequently suggesting this will impact provisions.

The more buoyant SP movement today following Lloyds suggesting an additional £800m provision either lies in relief of finally having a top end number on this far less than was being floated under a CoA ruling, or potentially by the strongly worded tone from Lloyds / FirstRand / BMW, making an immense challenge to the scheme an absolute guarantee.

They are suggesting the presence of a commission or a contractural tie was intentionally hidden (It wasn’t). Therefore the 6 year window triggers ‘now’ basically, the time when it has been made public knowledge.

CONC rules pre 2014 did not require a commission disclosure under normal circumstances. After that the presence of ‘may pay a commission’ etc in the contract should suffice for disclosure - as acknowledged by the SC. Therefore the 6 year window started at the time of the deal - millions of deals fall out of the scheme.

Cannot comment on the commercial ties element they have thrown into the redress - would need to research this more. However, SC also noted the presence of a commercial tie alone did not result in unfairness.

Fundamental flaws in the scheme if forced through the courts.

Basher - that analysis that you quote is a good example of 'a little bit of knowledge is a dangerous thing'.

The FCA is suggesting a 404 mass Redress Scheme for this, that is a very specific mechanism which has boundaries.

In a brief summary it must ensure the scheme is lawful, rational, and procedurally fair (the standard public-law tests). The CCA route allows the FCA some element of poetic licence, however, if the FCA were to base the scheme fundamentally on an interpretation of law the courts have explicitly rejected, that would be a considerable legal risk and open to challenge (potentially ultra vires). The SC explicitly rejected unfairness under the CCA in two of the three cases presented before it - very valuable for the banks legal argument.

If the FCA attempts to plough ahead with the proposed scheme which is currently in direct and firm contradiction of a very recent Supreme Court ruling, well this goes back to the courts and the banks have a very strong case for regulatory over-reach on a 404 mandated mass redress scheme.

Feel free to pass that along to the other forum, perhaps it will help someone.

FCA is scheduled to provide evidence to the HoL FSR Committee on Wednesday at 11.15am. Link below.

For clarity, this is the specialist, informed, committee chaired by Lord Forsyth who originally summoned the FCA to provide evidence and answer the concerns the panel had regarding the scheme. This will be an interesting watch;

https://committees.parliament.uk/event/25249/formal-meeting-oral-evidence-session/