LONDON, July 3, 2026, 18:01 BST
- Close Brothers finished 7.9% higher at 439.8p after the FCA paused parts of its £9.1 billion motor finance redress plan while legal challenges play out.
- The jump in one day gave Close Brothers about £48.5 million more equity, or around 15% of its £320 million motor finance provision.
- Trading volume surged 54% over Google Finance’s average, as the shares jumped about 15 times more than the FTSE 250’s 0.52% move.
- Shore Capital upgraded the stock to “buy” from “hold” and lifted its price target to 495p, up from 490p. London South East
Close Brothers Group plc (LON:CBG) jumped Friday after traders bet the motor finance exposure would play out over a longer period. Shares gained 7.9% to finish at 439.8p at 16:35 BST, having started at 411.4p and traded as high as 441.2p.
The numbers show why it matters. With Close Brothers up 32.2p, its market value climbed by about £48.5 million, using Google Finance’s figure of 150.71 million shares outstanding. That’s roughly 15% of the £320 million motor finance provision now on the books. The provision itself sits at about 48% of Close Brothers’ £662.84 million market cap.
| Market read-across | Latest cited level | Daily move | Investor read |
|---|---|---|---|
| Close Brothers Group plc (LON:CBG) | 439.8p | +7.90% | Shares revalued on motor-finance risk |
| FTSE 250 | — | +0.52% | Close rose about 15x the index gain |
| Barclays plc (LON:BARC) | 523.64p | +0.30% | Action in bigger banks stayed low |
| Lloyds Banking Group plc (LON:LLOY) | 114.50p | -0.13% | Some lenders like Lloyds saw no read-across bump |
The FCA said Thursday the Upper Tribunal has put some parts of its motor finance redress scheme on hold. The tribunal will hear challenges on Dec. 14-18, 2026 or Feb. 16-26, 2027. Companies aren’t required to work out or pay redress, or send compensation notices, under the schedule until the process is over.
This shifts the immediate cash outlook for Close Brothers. The bank said in May its £320 million provision had already factored in potential delays from legal action. Close Brothers at the time also said the ultimate amount could change depending on what happens with those legal and regulatory challenges, or other industry developments.
| Close Brothers metric | Figure | Why it matters now |
|---|---|---|
| Motor finance provision | £320 mln | This is the big overhang for the stock |
| Market value | £662.84 mln | The provision is close to half the equity value |
| One-day equity value gain | About £48.5 mln | Market gave credit for reducing risk |
| CET1 ratio at April 30 | 14.3% | Capital level after taking the charge |
| Loan book at April 30 | £9.3 bln | Lending base for rebuilding capital |
| Bad debt ratio, year to date | 0.8% | Still running under long-term guidance |
Shore Capital’s new rating gave shares another boost. Sharecast said the broker upgraded Close Brothers to “buy” from “hold” and put a 495p target on the stock. That is 12.6% above where the shares closed Friday. London South East
The FCA values the total industry scheme at £9.1 billion. The regulator says it covers customers who got unfair treatment from 2007 to 2024. Lenders still need to prepare, find complaints and keep collecting data, even with some pauses in the timetable.
Close Brothers wasn’t part of the group that challenged the scheme. The FCA named Consumer Voice, Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance as the challengers. Reuters said most firms, such as Close Brothers, Lloyds, Barclays and Santander, didn’t contest the proposal, but some questioned its scope.
Daniel Gore, partner at Withers, told Reuters it is set to be a “ferocious fight for every compensation percentage point and form of assessment criteria.” Reuters
Close Brothers CEO Mike Morgan said in the bank’s May update that its “capital position remains strong after absorbing the additional provision.” The update said the lender has a 7.0% annualized net interest margin so far this year, a loan book of £9.3 billion, and a bad debt ratio at 0.8%.
The FCA said payments under the scheme could start in 2027 if it stands and isn’t appealed. If the scheme gets overturned and the watchdog has to consult again, payouts could be held up until 2028 or later. The regulator also told firms to prepare for the scheme falling through, holding the right capital and liquidity in a UK legal entity.
