In the wake of a Financial Conduct Authority (FCA) review into the motor finance industry, Close Brothers, one of the UK’s leading specialist lenders, has undergone a significant restructuring to strengthen its financial standing. The motor finance sector accounted for a substantial 20% of the bank’s £9.5 billion loan book, making it a critical area of focus.
Nearly two years ago, Close Brothers’ chief executive announced that the bank would take “decisive actions” to bolster its capital structure. This bold overhaul came as the FCA scrutinised the motor finance market, a segment that has long been a crucial part of Close Brothers’ business model.
The motor finance industry has faced increased regulatory scrutiny in recent years, with concerns raised about potential unfair practices and the impact on vulnerable consumers. The FCA’s review, which is still ongoing, has put pressure on lenders like Close Brothers to re-evaluate their operations and ensure compliance with evolving industry standards.
In response, Close Brothers has undertaken a comprehensive review of its motor finance division, implementing a range of measures to enhance its financial resilience and customer-centric approach. This includes strengthening underwriting standards, improving transparency in product offerings, and enhancing risk management practices.
“We recognised the need to take decisive action to strengthen our position and better serve our customers,” said the Close Brothers chief executive. “The motor finance industry is undergoing significant change, and we are committed to adapting our business to meet the evolving regulatory landscape and customer expectations.”
The bank’s efforts have not gone unnoticed. Industry analysts have praised Close Brothers’ proactive approach, noting that the lender has taken steps to address the FCA’s concerns and position itself for long-term sustainability.
“Close Brothers has demonstrated its ability to navigate the challenges facing the motor finance sector,” said a financial analyst at a leading investment firm. “By taking a proactive and responsible approach, the bank is well-positioned to maintain its position as a trusted provider of specialist financial services.”
As the FCA’s review continues, Close Brothers’ commitment to strengthening its motor finance operations is likely to be a key focus for the bank in the coming years. With a renewed emphasis on compliance, customer protection, and operational resilience, the lender is poised to emerge from this period of scrutiny as a more robust and adaptable financial institution.