KKR-backed fintech takes £13m hit from motor finance scandal
A UK fintech backed by investment giant KKR has posted a hefty loss after being forced to set aside cash for the brewing motor finance scandal.
Oodle Finanical Services recorded a pre-tax loss of £38m for the financial year ending 30 June 2025, after the firm was forced to set aside a whopping £12.8m in provisions for the forthcoming regulatory redress scheme on the car mis-selling saga.
The Financial Conduct Authority (FCA) is set to lay out the full details of its industry-wide redress scheme following a Supreme Court battle in the summer of last year into the use of discretionary commission arrangements in the car finance industry.
The deals – which included ‘secret’ commission paid by lenders to car dealerships without consumer knowledge – were found to be unlawful by the Court of Appeal in October 2024. But Close Brothers and Firstrand took their legal battle to the highest court in the land last year, where Justices sided with lenders on two out of three appeals.
This opened the door for the City watchdog to introduce a redress scheme on the grounds of “unfairness” – the criteria the sole appeal was upheld on after finding the 55 per cent commission was outsized.
The FCA has said the threshold for its redress – where 14.2m agreements are estimated to be eligible – will be 35 per cent.
Car finance fintech braces for redress
In its latest Companies House filings, Oodle said “the only element” of the redress scheme which applies to the firm is high commission, with the lender having not participated in discretionary arrangements.
The UK fintech said £9.5m of the provision related to customer compensation whilst £3.3m was allocated to run the scheme.
Oodle added it maintains the capacity to fund the scheme “as currently defined” but warned of “additional risks arising” relating to a material change to the final design of the scheme or a “significant amount of customers” challenging the redress determination.
Backlash to the FCA’s initial proposals outlined last October has mounted over the last months with banking giants Barclays, Lloyds and Santander all taking a swing at the City watchdog.
But equal controversy has risen on the consumer front, with All-Party Parliamentary Group (APPG) on Fair Banking accusing the regulator of leaving a £4.4bn gap in the proposed scheme favouring the lenders.
Oodle’s loss in the last financial year came despite total income edging up five per cent to £110m after a surge in new loan volumes reached £441m, up from £325m the year prior.
Loan impairments – the cost of customers not paying back their loans – also tumbled to £21.5m from £35.3m the year prior. This helped improve the firm’s bottom line from a pre-tax loss of £54m in 2024 even as the lender dealt with the impact of the motor finance hit.
The company also slashed its cost base in the last year after cutting its headcount by five per cent to 399, taking employee costs down to £27.5m.
Administrative expenses tipped to £24.4m, from £26.8m the year prior.
Last year, Oodle landed a £30m boost from its majority shareholder KKR, which it can pay back by July 2026 or the debt can be swapped for additional company shares.
KKR first invested in Oodle in 2017 with a £60m Series B injection, establishing the investment titan as a primary owner of the fintech.