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Whilst I believe that you possibly may be right to a certain extent that the banks may capitulate and decide not to challenge the FCA via a JR, you are also suggesting that the market is going to value a UK FTSE 250 bank at 0.65xTNAV (870 a share) i.e. a 35% discount on its net asset worth once CBG confirm that the 300m provision is enough? That a very conservative view and would like to know whats thats based on?

Once CBG have confirmed that the 300m is sufficient, then no matter what happens after that, the tail risk to the bank regarding payouts is gone. The dividend should be restarted this year, then the management have already stated that a return to ROTE of 10%+ by 2027/2028 is the target. A loan delinquincy rate of less then 1% and profits back to 100m-150m already hinted at. This implies a TNAV of 910 to 1050 a share. Normally high quality, stable well run banks like CBG (used to be) trade at 1-1.2xTNAV.

So if all plays out as it seems to be, the tail risk of more than the 300m for the redress scheme disappears, I for one, will be very surprised if the share price is still 0.65xTNAV (565ish a share) by November this year....

@Knot I would just like to say thank you for all the work you have done on the legal implications and CP25/27 and PS26/3

I am just going to post a summary of what you have written, hopefully makes it clearer for all on here, it did for me;

1. The Ultra Vires Threshold (s.404 FSMA)

The Point: Under Section 404, the FCA can only mandate redress for acts that a court would find actionable. By creating a "hybrid remedy" that ignores the fact-specific balancing required by the Consumer Credit Act (s.140A), the FCA is legislating new liability rather than regulating existing law.

The JR Impact: If a court agrees the FCA has bypassed the "judicial consistency" requirement of s.404, the entire mass-redress mechanism could be struck down as an unlawful power grab.

2. Contradicting Hopcraft and Johnson

The Point: The Supreme Court in Hopcraft (paras 330–337) emphasized that "unfairness" is not a blanket presumption. It requires looking at the size of the commission, the nature of the disclosure, and the Consumer Responsibility Principle (para 336)—the duty of the customer to read their documents.

The JR Impact: The FCA’s scheme treats non-disclosure as presumptively unfair. A JR would argue this effectively "deletes" the consumer's side of the legal scales, making the scheme incompatible with the Supreme Court's ruling.

3. The "OFT Gap" and Retrospectivity (2007–2014)

The Point: The FCA split the scheme into two parts (pre and post-2014) as a tacit admission that it lacks a clear mandate for the era when the Office of Fair Trading (OFT) was the regulator.

The JR Impact: Lenders will argue that the 2007–2014 limb is void because the FCA cannot retrospectively apply 2026 standards to 2009 conduct. Furthermore, the Limitation Act 1980 and the Canada Square ruling protect lenders unless "deliberate concealment" is proven—something the FCA cannot assume en masse.

4. Evidential Burden and Record Retention

The Point: Lenders are only required to keep records for six years. The FCA is attempting to shift the burden of proof onto lenders for loans dating back 19 years, where evidence likely no longer exists.

The JR Impact: A JR would highlight the "irrationality" of a scheme that demands proof from a period where the law explicitly allowed records to be destroyed. This makes the 2007–2014 scheme operationally and legally impossible to defend.

5. Misapplication of Agency/Fiduciary Duty

The Point: The scheme relies on a quasi-fiduciary duty for dealers. However, Hopcraft (paras 339–340) confirmed that dealers are not fiduciaries and have their own commercial incentives.

The JR Impact: If the "bribery/equity" claims fail in court, the FCA cannot use them as a basis for a mass-redress scheme. The scheme’s "hybrid remedy" would be seen as a "figment of imagination" that doesn't exist in English law.

Https://www.bbc.co.uk/news/live/czx94evl5lrt

Thank you for that.

And now, all we need is a positive CAT judgement........... its likely Paypoint may lose the competition arguement but, they will most definitively win the counter factual, meaning, little if no payout which is essentially a huge win for Paypoint.

Re-rating will occur quickly especially with a declared 4.75% short and 100m EBITDA next year.

Mrmarkyw - "how did Lewis know this information before the schemes announcement on Monday?"

You really should keep up with things if you hold a lot of shares here? The FCA actually posted details of the proposed scheme in "FCA Consultation Paper CP25/27 - Oct/Nov 2025, where it proposes an industry-wide Motor Finance Consumer Redress Scheme, estimated at £11 billion, to compensate customers for undisclosed, high, or discretionary commission arrangements in motor finance agreements between April 2007 and November 2024." While it might sound like he is saying every loan is a guaranteed win, his "14 million" figure is a direct quote of the FCA's estimated total pool of eligible claims, not a claim that every single borrower in the country will get a cheque.

This is where CBG have got their figure of 300m for redress payments from....

So, the FCA finalised scheme is due next Friday after 1700hrs as there has been no announcement as of today that it will be released. At least then, we will all be aware of CBGs actual liabilities under the scheme

It will be interesting on this board LOL when it is published. See what comments there are on what CBGs liability will actually be when FCA post its actual guidelines for "inscope" agreements.....

TNAV is currently 870 in recent results, so if everything is as CBG have reported then an initial recovery of somewhere in the region of 0.6 - 0.8 of TNAV i.e. 520 - 700 could be on, even with the the threat of a possible JR by some banks?

Still awaiting the CAT Ruling (date to be confirmed) and record results trading update details on 22/04/2026.

Share price holding around 550 with a PE of only 7.8, hopefully a short squeeze incomming?

Https://www.stephensonharwood.com/insights/the-fca-s-proposed-motor-finance-redress-scheme/

This write-up presents a sophisticated legal and economic challenge to the FCA’s CP25/27 and, by extension, the Viceroy "short" thesis. It effectively argues that the FCA is attempting a "regulatory power grab" that contradicts the UK’s highest court.

Here are the four critical conclusions from this analysis:

1. The "Fact-Sensitive" Shield vs. FCA Assumption

The Supreme Court (Para 297) explicitly ruled that "unfairness" must be decided on a case-by-case basis.

The Problem for the FCA: The regulator is trying to use a "command-and-control" assumption that 43.6% of all loans since 2007 were automatically unfair.

Conclusion: This is legally "thin." If a borrower was happy with a competitive APR, the mere existence of a commission (partial disclosure) does not make the relationship unfair under Section 140A. This heavily supports CBG’s view that many of their 1.4m loans will not qualify for redress.

2. Viceroy’s "Wipeout" assumes a Legal Error

Viceroy’s report relies on the FCA successfully implementing this blanket, retrospective scheme.

The Reality: As the write-up notes, the Supreme Court ruled that a breach of a regulatory rule (like disclosure) does not automatically create an unfair relationship.

Conclusion: Viceroy is betting on a "political" outcome, whereas the legal reality (Johnson/Hopcraft) suggests a much higher bar for claimants. This makes Viceroy’s £1.2bn estimate look like a "worst-case legal impossibility."

3. The "Retrospective" Overreach

The FCA is trying to apply 2024 standards back to 2007, even though binding disclosure rules didn't exist until 2014.

Conclusion: This is the "Judicial Review" (JR) trigger. If the FCA pushes a scheme that ignores the Supreme Court's "sanity and clarity," lenders like Close Brothers and Lloyds have a massive opening to challenge the entire scheme in court. This "litigation tail" could delay any actual payouts for years, protecting CBG's capital in the near term.

4. Impact on CBG's "Record Returns" Target

The write-up reinforces your view that the market is over-discounting CBG.

Economic Reality: If the FCA has to narrow its scope to align with the Supreme Court (focusing only on "extreme" cases like 25%+ commissions), the £11bn industry bill (and CBG's £300m share) is likely the ceiling, not the floor.

Share Price: With a 14.3% CET1 ratio and a 980p NAV, any move by the FCA to respect the "fact-sensitive" rule would trigger a massive relief rally, moving the price from the "Viceroy-discounted" lows back toward the 700p–800p range.

Final Verdict: This analysis suggests the FCA is on a "collision course" with the Supreme Court. For an investor, it highlights that the short case (Viceroy) is built on a shaky regulatory assumption that will likely be dismantled by the legal reality of the Johnson/Hopcraft rulings.

I agree SG, then do like i did and report it to the FCA via their market abuse portal.

Has anyone on here aside from panicing, actually looked at what is being claimed by the short report? Looked at the figures and and actually worked out if what they are saying is feasable/true? Because their worst case existiential projection of CBG with equity being wiped out and having to provide approx £1.1 Billion in redress is just ludicrous and deliberately manipulating the current uncertainty. I would actually say they are deliberately trying to mislead retail investors. Knot and others have looked at this and thats why they are not worried and are actually laughing at the panic.

The 1.1 Billion comes from CBG having to pay out redress for EVERY loan since 2007 at a rate of approx 1100 per loan, not only that, they are saying that 8% interest will be added. This is why they are saying that it is existential. It is also based on the Supreme court Jonston ruling and doesnt even mention the more legally important HOPECRAFT ruling?

Now in Oct 2025 the FCA published the October 2025 consultation (CP25/27) was specifically designed to align its administrative scheme with the Supreme Court’s August 2025 findings. CBGs 300m is designed around this framework. In this framework, the FCA have specifically said that the average redress payment will be 700 and that INCLUDES interest.

As such this suggests a total historical pool of approx 1.2 million agreements for CBG since 2007. Applying the FCA's own 44% "unfair" rate to this pool results in an estimated 480,000 agreements likely to be eligible for redress. This total might be substantially lower when aligned with the Supreme Court Hopecraft ruling because CBG used standardised paperwork for all their loans which "disclosed that there may be comission paid" which effectively negates the fact that loans were not disclosed. The FCA have already hinted at a "PROPORTIONATE" scheme and they also have to avoid a Judicial review.

The FCA expects also an 85% participation rate. If 85% of an estimated 500,000 eligible customers claim under the scheme, that equals 425,000 claims, which matches the current provision almost perfectly. It is also likely that if the FCA do follow their own PROPORTIONATE guidence then these 425000 loans may be substantially less.

If the FCA tried appeared to wipe out a UK bank by ignoring a Supreme Court ruling, they would be acting ultra vires. The resulting Judicial Review would likely freeze the redress scheme for years, result in a victory for the banks and freeze the car finance market for years, a chaos the Treasury and the Bank of England would never permit.

This also doesnt even include CBGs reiterated 300m statement today and the fact that PWC MUST have signed off on that figure....

From the market reaction, it seems that it doesnt believe CBG has made enough provisions and there may well have to be a further writedown?

Especially with the note in the results that there will be a reduction in the workforce by 20%/600, the press are making it appear that CBG are kitchen sinking the balance sheet and scrambling for capital.

NAV increased to 980 but TNAV fell to 870 from 910 so thats unfortunate.

But, CET1 is a very large 14.3%, the cost savings are greater than expected up to 25m a year from 20m compounded and also the suggested return to double digit growth by 2028, that is excellent.

If Viceroy were correct and there were any questions about their solvency, CBG would have to come out today and increase provisions and inform the market.

But, there are 600 Job losses and a further 300m provision would mean a 3% hit to CET1 and be nasty.

I would like to point out that this exact same senario happened to Darktrace in 2023 when Quintessential Capital wrote a hitjob shot selling piece on them saying they were fraudulently claiming income and were "deeply sceptical" of Darktrace's financial statements, suggesting sales and growth rates were overstated through "channel stuffing" and "phantom" customers.

This all eventually proved to be groundless and a total fabrication but still initially crashed the share price 25% just before results. They had to get E+Y to write a totally independant audit report which exonerated them and the share price eventually recovered.

Is Viceroy just gaming their own short position?

So, Audited Reality: PwC has verified that Close Brothers' £300 million provision reflects the "higher end" of potential impacts from the FCA's consultation guidelines.

Market Disconnect: If over 70% of the loan book dating back to 2007 were truly unlawful, the bond market (currently trading at par) would be pricing in a collapse rather than stability.

Also, Viceroy's £1.2bn estimate assumes the FCA will mandate a 100% refund of all commissions above a certain level. However, the FCA is actually proposing a hybrid remedy and to suggest that CBGs entire loan book back to 2007 was over the 35% level proposed by the FCA just 4 months ago in october is just ludicrous.

The hopecraft Supreme court case was only about £180 of comission. You cant tell me that PWC have totally fecked up when auditing this when looking at the 300m in provisions and totally screwed it up?

The sharp drop in Close Brothers Group plc (CBG) shares today, 16 March 2026, is primarily driven by a highly critical report from Viceroy Research, which claims the bank has "systematically misrepresented" its exposure to the FCA’s Motor Finance Consumer Redress Scheme.

Viceroy Research

Viceroy Research

Key Drivers of the 17% Slump

Viceroy Research Short Report:

The research firm, which has taken a short position on CBG, argues that Close Brothers may need to double its existing provisions (at least) to cover potential payouts.

They suggest that the bank’s CET1 regulatory capital limits are now at risk and that equity-holders could be "substantially wiped out" in a potential future restructure.

Two of the main CBG bonds XP21 and FF30 are both trading at par or a slight premium to par, so despite the warnings of imminent doom for CBG from certain posters, the bonds are not distressed. Also, what a stroke of luck getting XP21/250m away before the current middle east madnesss and a likely hike in interest rates that will be comming shortly?

https://www.londonstockexchange.com/stock/XP21/close-brothers-group-plc/company-page

Always good to take a profit. Personally im waiting for the full year results and the "record figures". Next years guidance will also be fun, especially with the post office comments regarding paypoint and the parcels tie up recently.

Next big catalyst is the CAT ruling. A negligible award loss of say 0m to 10m or an outright victory sees a short squeeze and PAY back at 750.....

After this bizzare statement today from the FCA, im now with Knot in relation to actually expecting a JR. There is no way a JR is not applied for if the scheme doesnt align broadly with the supreme court ruling and ends up anything like SG2025s synopsis. It will soon be seen, when the scheme is finally published if it is ultra vires or not......... FCA will be hauled over the coals if it affects the market and credit availability and it looks like a JR will succeed?

Well, after an initial 3% drop this morning, buying pressure has pushed PAY up by another 3.7%

Surely gotta be some short positions using the current market turbulance to close? Especially as the CAT judgement is due any week now?

Liberty, what do you mean "once CET1 recovers - 2027 I expect." in relation to dividends and even though you dont specifically mention it, the stability and as a result, the financial structure of CBG?

CBG dont need the the CET1 to recover. It is already at a huge 13.8% according to CBGs own accounts on 31st July 2025 and with the Winterflood sale finalising in December it added another 30bps or so to make it approx 14.1%? CBG could easily restart dividends now and do a buyback scheme but wont due to all the regulatory, not financial, constraints.

Even if CBG took another 100m hit that would only take 100 bps from it down to approx 13%? It hardly needs to recover from there as the capital buffer is easily sufficent even if that occurs as that would still be above CBGs own CET1 guidance of 12% - 13% and the regulatory minimum of 9.7%?

Im starting to come around to Knots thinking about Clydesdale and that its more then likely a JR will happen, especially if the FCA scheme is onerous and doesnt align with the Supreme Court. Nationwide have had to pump more money in to keep its capital ratios up.

https://www.thisismoney.co.uk/money/markets/article-15601659/Nationwide-forced-pump-1bn-struggling-Clydesdale-Bank.html

Little bit of a short squeeze yesterday and today??

With Ex divi tomorrow and PAY cancelling another 100k shares by weeks end (down to 61.7m shares) sorts are increasing as a % even though they havent increased their positions....

The trading volume definitely points to a crowded exit over the last 2 days and a mini-squeeze taking place as the shorts will be on the hook for the divi tomorrow. The combination of high relative volume and a rising share price could indicate that buyers are aggressively chasing a limited pool of available shares. Volumes yesterday and today appear to be more than 50% above normal daily volume.

With the CAT verdict due soon, the report of record profits to come, its going to get interesting quickly, one way or another. Short squeeze could see PAY back at 750 in short order, similarly, a bad CAT result could see PAY back at 400/450....