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From today's Times:

"Shares in lenders most likely to be forced into compensation payments to consumers who purchased vehicles on credit will be closely watched in the City on Monday, after the financial watchdog set out plans for a redress scheme of up to £18 billion.

Banks had already set aside billions of pounds for possible compensation payments for people who bought a vehicle from a dealership that failed to properly disclose commissions they received from lenders. Lloyds Banking Group alone reserved £1.2 billion. However, analysts at the investment bank Jefferies predicted that the regulator’s plans “largely de-risk Lloyds’ shares” from the scandal and that the redress scheme “is consistent with our long-held assumptions”."

https://archive.ph/efNX1#selection-1683.0-1683.468

According to the FT:

"A potential yardstick for whether consumers are due redress could be the Supreme Court’s 2015 ruling in the so-called Plevin case that made banks pay compensation if they earned a commission worth over half their customers’ premiums on payment protection insurance."

I can still see it up, given that the worst case scenario has now been removed. As I said on Friday, I think it will close below 80p.

Given that Lloyds Banking Group has about 14 per cent of the UK car finance market and the FCA have today come up with an industry-wide compensation estimate of £9-18bn, that would mean Lloyds are on the hook somewhere between £1.26bn and £2.52bn (the lower figure being about what Lloyds have already set aside). The current worst case scenario of £2.52bn is far less than the previous worst case scenario of £5.6-6.1bn (based on the £40-44bn estimate, had the Court of Appeal judgment been fully upheld by the Supreme Court). Before Fridays judgment, presumably the market was having to price in the real possibility of that worst case scenario (£5.6-6.1bn) hit for Lloyds, which is no longer a risk.

Post-SC judgment, Lloyds closed on the NYSE at +3.32% (plus another 0.92% after hours). The LSE close (pre-judgment) was 75.74p. Using the NYSE figures as a guide (i.e. +4.24%) would make the LSE Monday close circa 79p. I think it might hit >80p in early trading, but then settle below that. Had the judgment gone badly, I think we would have been looking at a heavy fall. I don't think we are going to see any huge upward swing as a result of the judgment, given that Lloyds currently has the highest price-to-earnings ratio of all the FTSE 100 banks. I'll be very happy to be proved wrong though.

Moreover, you cannot haggle over the cost of a pint, whereas everyone knows that haggling over the price of a car is almost a national sport. Fairness is one thing, but rewarding complacency or indifference (i.e. failing to shop around) is quite another.

From the Daily telegraph:

"FCA to consider redress scheme for car finance payments

Britain’s financial watchdog will this weekend reach a decision on whether to offer a redress scheme for car finance customers.

The Financial Conduct Authority said it would decide before financial markets open on Monday whether to provide some form of remedy to people who took out car finance and paid commission they did not know about.

A spokesman for the regulator said: “We welcome that the Supreme Court has clarified the law and are grateful to the Court for delivering the judgment after the market closed.

“We want to bring greater certainty for consumers, firms and investors as quickly as possible.

“We will be working through the weekend to analyse the judgment and determine our next steps.

“We said we would set out within six weeks whether we would consult on a redress scheme. But we want to provide clarity as quickly as possible.

“So, we will confirm whether we will consult on a redress scheme before markets open on Monday 4 August.""

Ditto, my last 2 car purchases. Perry's offered finance but didn't persist once I said I was paying in cash. My latest purchase from Stoneacre was all done over the phone and via email. I said I was paying cash and finance was never mentioned.

Thanks to the deliberate timing of this judgment, by Monday morning the market should have a reasonable ballpark figure as to the extent of the banks' liabilities. Based on the current rise on the NYSE, I think we shall see circa 80p. Anything more will be a bonus. Once the FCA has set the parameters for compensation, which will be announced in the next six weeks, we should have a better idea as to how much Lloyds are on the hook for, so we may see a further adjustment in the SP after that.

I think the FCA will set the bar on what percentage was 'unfair'. Given the percentage in the case before the SC, I imagine it will have to be pretty high - and therefore uncommon.

The Supreme Court appears to have reached a judgment based on a common sense interpretation of the law and facts. The decision restores one's faith in the legal system.

Excuse my cynicism, but since when have broker ratings meant anything for Wimps (or, for that matter, any other holding)? The trend for this company is downward and has been for 10 years. If you're a lucky trader, buying now, you might make a few quid, but for a long-term investment, look elsewhere.

There is nothing particularly wrong with Wimps, but the market has hated it for years - and there is nothing to indicate a change of sentiment. The reason is something of a mystery, given the performance of other HBs. The yields have been good, but that hasn’t stopped the market cap from steadily falling for the past decade. No point in ‘gaining’ 5% pa on a purchase that loses 7% pa.

Poor old Wimps cannot even rally with the Footsie at record highs. For me it has proved to be an utter dud. I'm still down on my original purchase sum, despite reinvesting the divis for the past seven years. Wimps is the exception that proved the rule of steady share investing.

And this has what to do with Lloyds Banking Group shares?

In other news, my Lloyds holding became a triple bagger today (inc dividend reinvestments)

B&M were on a roll for several years, but I think their heyday has passed. I used to shop there frequently, but hardly ever do these days. The food and consumables offering is no longer all that competitive (e.g. overpriced and shrinkflated Unilever stuff) and the homewares can be had cheaper online. The garden offering is good, but Wickes are probably cheaper and do very reasonable delivery.

Given that we've lost almost 30% since last September, we are going to need a few rockets.

Quite a rally today. We're obviously due a nosedive.

Nice to see M&G finally realizing its potential. Patiently holding and reinvesting the dividends since their split from the Pru has made this a double bagger for me.