06/01/2021
Are you considering financing your next vehicle purchase, or perhaps you've heard the name "Close Brothers Motor Finance" and want to understand more about their services? In the dynamic world of automotive finance, choosing the right provider is crucial. Close Brothers Motor Finance stands out as a prominent player in the United Kingdom, offering a wide array of flexible solutions for both personal and commercial vehicle needs. But who exactly are they, what do they offer, and what recent developments might impact their operations and the wider motor finance landscape?
- Understanding Close Brothers Motor Finance
- A Legacy of Trust and Award-Winning Service
- Navigating Financial Challenges with Close Brothers
- The Landmark Legal Battle: A Turning Point for Motor Finance
- Industry-Wide Repercussions and the FCA's Ongoing Role
- What Does This Mean for Motorists?
- Frequently Asked Questions (FAQs)
Understanding Close Brothers Motor Finance
Close Brothers Motor Finance is a well-established and highly respected finance provider in the UK, dedicated to helping individuals and businesses acquire vehicles through manageable monthly instalments. As a division of Close Brothers Group plc, a FTSE250 company with a global presence, they bring decades of financial expertise and stability to the motor finance sector. Their core business revolves around providing convenient and flexible finance products, making vehicle ownership more accessible for a diverse customer base.
They operate extensively across the UK, collaborating with an impressive network of over 5,000 dealer and broker partners. This vast network ensures that their finance solutions are readily available to a broad spectrum of customers, whether they are purchasing from a large dealership or a smaller, independent broker. The range of vehicles they finance is comprehensive, encompassing:
- New and used cars
- Light Commercial Vehicles (LCVs)
- Motorcycles
- Leisure vehicles, such as caravans and motorhomes
One of their distinguishing features is their personalised approach to lending. Unlike some lenders who rely heavily on automated systems, Close Brothers Motor Finance reviews applications on a case-by-case basis. This bespoke assessment allows them to understand each motorist's unique circumstances, often leading to more flexible and tailored finance terms that might not be available through more rigid lending models. This commitment to individual needs is a cornerstone of their customer-focused philosophy.
A Legacy of Trust and Award-Winning Service
With over thirty years of experience in the industry, Close Brothers Motor Finance has built a robust reputation for reliability and expertise. Their longevity in the market is a testament to their proven track record and consistent delivery of quality service. This dedication to excellence has not gone unnoticed by the industry.
Close Brothers Motor Finance is a multi-award-winning provider, consistently recognised for their outstanding contributions to the sector. Notably, they secured the prestigious gong for Independent Finance Provider of the Year at the Motor Finance Europe 2024 awards. Furthermore, they were named Finance Provider of the Year (Prime) at the Car Dealer Power Awards 2024, an accolade they have impressively won for the sixth consecutive year. This repeated success underscores their unwavering commitment to customer satisfaction and their ability to "go the extra mile" in securing fast and affordable finance solutions for motorists.
Understanding that life can present unexpected challenges, Close Brothers Motor Finance also provides support for customers who may face financial difficulties. They recognise that from time to time, circumstances can affect a customer's ability to repay their finance agreement. In such situations, their dedicated team is on hand to help find a solution. Customers experiencing money worries are encouraged to reach out directly to discuss available support and potential arrangements. This proactive approach to customer welfare highlights their commitment beyond merely providing finance. Should you find yourself in such a position, you can speak to them directly by calling 0333 321 6060.
The Landmark Legal Battle: A Turning Point for Motor Finance
The motor finance sector recently experienced a significant development that sent ripples throughout the industry, directly impacting Close Brothers. On a pivotal Monday, Close Brothers shares saw a remarkable relief rally, surging over 25 per cent in early trading and hitting a high of 500p. This dramatic upturn followed a landmark victory for the bank at the Supreme Court regarding a crucial motor finance case.
The Supreme Court upheld Close Brothers' appeal to overturn an October ruling that had previously found it unlawful for banks to pay a commission to a car dealer without the customer's informed consent. This earlier ruling had caused considerable concern across the banking sector, leading to significant drops in share prices for many lenders, including Close Brothers, whose shares had plummeted to a low of 185p in the months following the initial decision.
The Supreme Court's ruling on Friday clarified that claims against lenders couldn't succeed based on fairness, also known as equity, or tort, which refers to wrongful actions warranting compensation. This decision brought "much-needed legal certainty" for UK lenders, as noted by Matt Britzman, a senior equity analyst at Hargreaves Lansdown. It provided a significant boost to investor confidence, as the industry had been bracing for potentially massive financial hits.
Prior to the Supreme Court's decision, Close Brothers had prudently set aside £165 million for provisions to cover potential liabilities. Analysts had warned that this figure could escalate dramatically should an adverse ruling be handed down. Some predictions were dire, with Moody’s forecasting a potential £30 billion hit to the banking sector in a nightmare scenario, and one HSBC analyst even floating a staggering £44 billion figure. The Supreme Court's verdict alleviated much of this immediate financial pressure on lenders.
Industry-Wide Repercussions and the FCA's Ongoing Role
While the Supreme Court ruling was a clear victory for lenders like Close Brothers, the story of motor finance commissions is far from over. The Financial Conduct Authority (FCA), the UK's financial services regulator, confirmed shortly after the ruling that it would proceed with a consultation on an industry-wide redress scheme. This means that despite the legal clarity provided by the Supreme Court, the regulator is still exploring ways to ensure fair outcomes for consumers who may have been impacted by historical commission practices.
The City watchdog aims to publish its consultation by early October, with total costs of the potential redress scheme for the industry expected to range between £9 billion and £18 billion. This indicates that even with the Supreme Court's favourable decision for lenders, there remains a degree of uncertainty regarding the ultimate financial impact on the group, including any adjustments to their provisioning assessments. Close Brothers has stated its readiness to engage with the FCA in respect of this consultation, highlighting the collaborative approach required to navigate this evolving regulatory landscape.
Indeed, as Matt Britzman observed, the Supreme Court's decision was "not a home run" because of the FCA's announced plans for a compensation scheme. This ongoing regulatory scrutiny means that while the immediate legal threat has subsided, the industry must still prepare for potential financial outlays related to past practices. Other major lenders, such as Lloyds Banking Group (which owns Black Horse, a leading vehicle finance provider), Santander, and Barclays, had also set aside significant provisions in anticipation of adverse outcomes, further underscoring the widespread impact of this issue.
Despite the Supreme Court's general finding, it is worth noting that the court did side with one claimant, finding the commission "unfair" under the Consumer Credit Act. This nuance suggests that while the broader legal challenge to commission structures has been resolved in favour of lenders, individual cases or specific circumstances could still lead to findings of unfairness under existing consumer protection legislation. This underscores the complexity of consumer finance and the ongoing need for transparency and fairness in all financial dealings.
What Does This Mean for Motorists?
For motorists seeking finance, the recent developments reaffirm the importance of understanding your finance agreement. While the legal landscape around commission payments has gained some clarity, the FCA's continued focus on consumer redress means that transparency remains a key priority. When considering a finance agreement with Close Brothers Motor Finance or any other provider, it's always advisable to:
- Understand the total cost of the finance, including interest and any fees.
- Ask about any commissions paid to the dealer by the finance provider.
- Ensure the terms and conditions align with your financial capacity.
Close Brothers Motor Finance continues to offer competitive rates and flexible terms, leveraging their experience to find suitable finance solutions. Their commitment to reviewing applications on a case-by-case basis can be particularly beneficial for those with unique financial profiles.
Comparative Overview: Lender Provisions (Pre-Supreme Court Ruling)
The following table illustrates the scale of provisions set aside by major UK lenders in anticipation of potential liabilities related to motor finance commissions, prior to the Supreme Court's definitive ruling:
| Lender | Provisions Set Aside (Approx.) |
|---|---|
| Lloyds Banking Group (Black Horse) | £1.2 Billion |
| Santander | £295 Million |
| Close Brothers | £165 Million |
| Barclays | £90 Million |
Note: These figures reflect provisions made before the Supreme Court ruling and do not account for potential future adjustments based on the FCA's forthcoming redress scheme.
Frequently Asked Questions (FAQs)
- What types of vehicles can I finance with Close Brothers Motor Finance?
- You can finance a wide range of vehicles, including new and used cars, light commercial vehicles (LCVs), motorcycles, and leisure vehicles like caravans and motorhomes.
- How does Close Brothers Motor Finance determine eligibility?
- They employ a personalised, case-by-case review process. This means they assess each application individually, considering your unique financial circumstances to offer flexible and tailored finance terms.
- What should I do if I'm struggling to make my finance payments?
- Close Brothers Motor Finance encourages customers facing financial difficulties to contact their team directly. They have support available to help you find a solution and can be reached on 0333 321 6060.
- Did the recent Supreme Court ruling affect Close Brothers Motor Finance?
- Yes, Close Brothers won a landmark Supreme Court case that overturned a previous ruling concerning dealer commissions. This brought significant legal certainty to lenders and positively impacted Close Brothers' share price. However, the Financial Conduct Authority (FCA) is still consulting on a potential industry-wide redress scheme.
- Is Close Brothers Motor Finance a reputable company?
- Yes, they are a division of Close Brothers Group plc, a FTSE250 company with over 30 years of experience in the industry. They are multi-award winning, recognised for their customer service and expertise, including being named Independent Finance Provider of the Year and Finance Provider of the Year (Prime) multiple times.
In conclusion, Close Brothers Motor Finance remains a significant and reliable entity in the UK's automotive finance sector. Their commitment to flexible, customer-centric lending, coupled with their resilience in navigating complex legal and regulatory landscapes, positions them as a trusted choice for motorists. While the industry continues to adapt to evolving regulations, their core mission to provide accessible vehicle finance remains steadfast. Understanding their offerings and the broader market context empowers consumers to make informed decisions about their vehicle purchases.
If you want to read more articles similar to Close Brothers Motor Finance: Your UK Guide, you can visit the Automotive category.