Motor finance probe accelerates as FCA chief warns it’s ‘improbable we’ll find nothing’
The Financial Conduct Authority said it is looking to accelerate its probe into the motor finance market today as chief Nikhil Rathi warned that it is “improbable we will find nothing to report”.
In a statement to the stock market ahead of a speech today, Rathi said because of the impact the probe had had on firms, the regulator wanted to clarify its investigation “in a more condensed time frame and on a basis that is robust and fair”.
The comments come after the the Financial Conduct Authority (FCA) in January announced it would “review historical motor finance commission arrangements” and ensure consumers receive an “appropriate settlement” if it finds evidence of widespread misconduct.
Since then billions has been wiped of the value of some banks as investors fret over the size of a potential compensation bill.
In his comments today, Rathi warned the probe was likely to yield further action against firms.
“While certainty is not something I can provide today, and I cannot prejudge what we might find, I can say in my view it is improbable we will find nothing to report as we look at historic motor finance sales,” he added. “Some firms will be better placed than others. Equally, I do not anticipate this issue playing out as PPI did, not least because we have intervened early in the interests of market orderliness.
Analysts at investment bank RBC have estimated a downside impact of between some £2bn and £8bn for the motor finance sector.
They said the review could hit Lloyds Bank’s pretax profit by some £270m to £1.2bn, the largest absolute impact of banks in their coverage.
More to follow