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Has gone from "This is NOT the case the court is deciding" - https://x.com/MartinSLewis/status/1948790812562673729

To "... not a direct part of the Supreme Court case..." - https://www.moneysavingexpert.com/news/2025/08/car-finance-supreme-court-martin-lewis/

It'll be interesting to what happens on Monday after the FCA announcement.

So, let's see how good "crowdsourced wisdom" is...

The results of yesterday's survey for the closing price on Monday based on 26 responses. I've only taken responses BEFORE the SC judgement started.

I have used yesterday's closing price as a baseline.

We have 5 pessimists with an average DROP in price of 22%. The lowest submitted price was £2.50.

So, we have 21 optimists with an average INCREASE of 36%. The highest submitted price was a whopping £11.00. (I could live with that much optimism in my life!)

The optimists break down into:

- 2 looking at a modest 5%(ish) gain

- 9 opting for a 15%(ish) gain

- 6 going for a 35%(ish) gain

- 3 bulls aiming for a 65%(ish) gain

- our 1 super-optimist at a 176% gain

Our average closing price on Monday is £4.96 (25% gain) and the median £4.77 (20% gain).

I'll repost after close on Monday with our "winner".

“… we will confirm *whether* we will consult on a redress scheme before markets open on Monday 4 August…”

Interesting choice of words. “Whether”. Not “how” or “when”.

I'm just reading the judgement.

The Johnson case is interesting as the ruling hinges not just on the size of the commission (55% of the cost of credit), but also on the fact that the dealer purported to offer credit from a panel of 22 suppliers, but had a commercial agreement with FirstRand that it could not submit the potential loan to another party unless the FirstRand subsidiary had first declined the loan. (Para 130 of the ruling onwards.)

The ruling is well worth a read - although it is 109 pages - and is refreshingly pragmatic in its approach.

"Sorry stupid question - who was the lender in the Johnson case?"

FirstRand

Also...

Did I hear correctly that they didn't consider non-disclosure of the existence of commission as an issue? Or was that wishful thinking?

Well, that was good on so many levels.

I suspect that any FCA redress scheme will now focus on an "unfairness test" along Plevin lines.

Thoughts?

Interesting statement - ..."the car dealer has a commercial interest in the finance agreement..."

Just for fun - and because there's precious little to do today with this - I've created a survey.

Please follow the link to enter your guess as to the closing price on Monday...

https://www.surveymonkey.com/r/9QQDFTZ

I'll collate, summarise and post over the weekend.

"Some might suggest the same about share buyers here..."

Well that caused a chuckle. Thx :)

Given a favourable ruling then I wouldn't be surprised at CBG becoming a takeover target. I could see a view of making a cheeky offer quickly before it recovers to anywhere near fair value.

Thoughts?

Stoopid and AMGenerousDerby - the SC ruling has the potential to very much affect how the FCA enforces rules - and therefore can affect the impact of DCA redress.

A key point is that DCAs were allowed until they were banned - so companies were operating within the rules set by the FCA.

If the SC rules that the commission payments didn’t break the law; and effectively says “if you were following the rules set by the regulator then you didn’t break the law” then it limits the FCA’s room for manoeuvre in the redress scheme.

Financial services companies want to operate on the basis that if they’re following the rules in place at the time - then the FCA won’t fine them afterwards unless their conduct is egregious. The DCA commissions were far from egregious.

Just my view.

“The puzzeling thing about all of this conjecture, is the SC timing.”

I’ve been reflecting on this and wouldn’t be surprised if there was a degree of SC / Government / FCA agreement to the timing.

A partial overturn only removes some uncertainty (albeit the worst bit). The intention could be to allow the FCA (and maybe Treasury) to time to set out next steps - removing a bit more uncertainty before trading reopens.

“Does anyone know what the percentage of Close Brothers car loans were made on a DCA basis?”

In a word, no.

That a DCA was a in place also doesn’t make it a given that discretion was exercised.

£6bn

“So fair value is quoted variously at 3.85.”

That’s a fair observation. But the public only gets to see a point value without the rationale and assumptions that will be in the analyst note that their clients receive.

And fair value for analysts is whatever is “fair” given the absolute certainty they have when they did the analysis. So I suspect most of the fair value estimates include a pessimistic view of likely SC and FCA redress scheme outcome.

When this all blew up I posted a guess here that the cost to CBG would be - at worst - £200m. And I still think that’s the case.

I’m actually more optimistic than that as I think there’s a good chance that the ruling will box the FCA into a corner along the lines of…

If you want to be the setter of rules then you have to abide by the rules you set.

That would blow up the bulk of the DCA claims.

Of course, it would all go utterly pear-shaped.

What do I know.

[Long term holder and not going anywhere soon.]

“This is crazy.

Fantastic results but a dismal response.”

I agree, but suspect that a lot of the good news is already in the share price.

In truth Caravan, unless there’s anything really substantive, then the SP is more at the mercy of the macroeconomic news than the results.

I’ve now read and re-read the LIBOR judgement four times.

First up, there’s little that superficially helps the CBG judgement. The ruling was that the juries were mis-directed. The ruling goes out of its way to state that there were potentially grounds for convicting of fraud. But because the juries were directed that commercial considerations constitute grounds for fraud, then the verdict was unsafe.

The key point in the verdicts is that LIBOR and EURIBOR required banks to submit an honest assessment. But that honest assessment was legitimately within a range of values. So it was perfectly legitimate for a bank to submit a rate in that range that suited them.

What *might* constitute fraud is asking another party at another bank to submit a rate that is knowingly *not* in the range that they would have legitimately submitted.

It’s also interesting that Martin Lewis (in the link below) has both shifted his ground somewhat and also falsely states that the SC cases are not about DCA payments.

Whilst strictly true, the rulings have the potential to profoundly impact the FCA’s room for manoeuvre.

What’s striking, for me, is the tenor of the judgement. I read the judgement as saying:

- commercial considerations are perfectly legitimate

- just because something is immoral, it doesn’t make it against the law - so asking for someone to submit a higher or lower rate might be immoral, but it wasn’t illegal *unless* they had the intent of having someone submit a rate that wasn’t “legitimate”.

- where you have followed market rules then your actions - no matter how morally repugnant - aren’t illegal. And particularly if they were common practice. And especially if the regulator knew. Or should have known.

Where this takes us…

The expectation that a car dealer should act in their own interests for the car sale and then in the customer’s interests for the credit agreement seems highly unlikely to be upheld. That *certain* customers might be financially illiterate is a consideration, but if a fact find wasn’t required by the regulations at the time then it’s unlikely that the SC would rule that it was against the law.

DCAs were both common practice and *known* about by the regulator until banned.

If the FCA wants to be the setter of binding rules then complying with the rules in force at the time of the transaction is almost certainly going to be enough for the SC.

The point about the DCA claims, and why I think Martin Lewis is wrong, is that any ruling along the lines of “if you followed the rules in place at the time - even if mortally repugnant - then you’ve not broken the law” blows up the DCA claims.

Those claims relate to the period before they were banned and - for a period - known about by the FCA.

What do I know? Not much. But neither does Martin Lewis I’d argue.

I’d encourage you to read the judgement yourself.

NervousNelly - you’re broadly correct. But you’re maybe being a little too precise. But you are an accountant after all!

Prior to IFRS17 the full amount of profit was recognised when the profit was sold. Unless the company chose to provision.

Under IFRS17 the profit is recognised incrementally and is shown as a liability until released.

So, as per your example, if a 20 fixed term year annuity is written then, in year one (broadly), 1/20th of the profit is recognised and 19/20ths put into the “future profits”. (This is technically called the Contractual Service Margin (CSM) and Risk Adjustment (RA) pot(s). There are technically two pots, but they are usually referred to as a single “pot” and most insurers have taken to calling the “store of future profits” or similar.)

Next year another 1/20th is drawn down as profit - leaving 18/20ths in the pot. And so on for the 20 years.

(Even this “straightforward” example is far from it as profits will be probabilised against longevity. In plain English, a person aged 70 taking a 20 year fixed term annuity will have a life expectancy of (something like) 84. So, a proportion of clients will die before the end of the term - resulting in a degree of “excess profit”.)

There are, of course, some wrinkles.

IFRS17 requires the “future profits” pot to be revalued every year. So changes in longevity assumptions, for example, might (positively or negatively) impact the level of future profits. This mirrors the “mark to market” requirements of IFRS9.

Also, “pure insurance” contract liabilities don’t necessarily align with policy duration. So, if you write public liability insurance for this year; someone stubs a toe this year and dies of a blood clot that can be attributed to the toe stub - then it’s the insurer at the time of the accident that’s liable - even if the death occurs in 20 years time.

So, a pure insurance contract written half way through the year might have:

- 40% of the profit recognised this year

- 40% recognised next year

- 2% per year recognised for the next 10 years - to recognise the liability overhang.

What you’ve not quite got right is that the store of future profits is just that - a store of “expected” future profits - net of expected liabilities. The expected liabilities are elsewhere on the balance sheet.

Hope that helps.