- Court ruling on Close Brothers motor case could set precedent for the FCA
- Lloyds shares down 5%
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“What started as a good week has ended in tears for Lloyds as it looks like the motor finance debacle could cost more than initially thought. Details are thin but today’s Close Brothers court ruling, upholding the appeal of the claimant in the Hopcroft motor finance case, suggests the FCA could take a harsher view in its wider investigation into motor finance discretionary commission arrangements.
Lloyds has set aside £450mn already, and analysts had pencilled in another c.£500mn for next year. But with some rumours suggesting the number could be closer to £2bn, that leaves a £1bn hole to be filled in current consensus and shares have dipped 5% as a result. It’s hard to put an exact number on these things, and Lloyds isn’t the only name with skin in the game. But it does have more exposure than most of its peers, and while the broader Lloyds investment case looks solid, this remains one of the biggest risks.”
