Santander UK boss: Government must overrule FCA on motor finance
Santander UK has said it will delay its third-quarter earnings report due to “uncertainty” following the financial watchdog’s motor finance redress scheme.
The Spanish banking giant was due to publish its financial report for the third-quarter on Wednesday but has put it on hold “pending greater clarity regarding the [Financial Conduct Authority]’s proposals”.
The bank’s UK chief Mike Regnier said: “We believe that the level of concern in the industry and market is such that material changes to the proposed FCA redress scheme should be an active consideration for the UK Government.”
He warned if the government does not intervene “the unintended consequences for the car finance market, the supply of credit and the resulting negative impact on the automotive industry and its supply chain could significantly impact jobs, growth and the broader UK economy.”
Santander is currently on the hook for £295m in the car mis-selling scandal.
RBC analyst Benjamin Toms said: “Our best estimate, based on peers provisioning levels, is that the bank needed to take an incremental provision of around £500m.”
A spokesperson for the FCA said: “We’ve set out in detail the thinking behind our proposals and welcome considered feedback.
“We believe a compensation scheme is the best way to settle, for both lenders and consumers, liabilities that exist no matter what. Alternatives would cost more and take longer. It’s vital we draw a line under the issue so a trusted motor finance market can continue to serve millions of families every year.”
A Treasury spokesperson said: “The independent Financial Conduct Authority has set out its consultation and it’s vital that all stakeholders take part. We want to see this issue resolved in an efficient and orderly way that provides certainty for consumers and firms.”
Santander joins chorus of redress warnings
Following the City watchdog providing further insight into its regulatory redress scheme, lenders across the industry including Lloyds, Close Brothers and Barclays have hiked their provisions for the scandal.
Banking giants have also taken aim at the FCA for what they branded a “disproportionate” redress scheme.
The boss of Lloyds has warned the motor finance redress scheme could knock two decades of profitability off the car finance industry.
Charlie Nunn, the bank’s chief, has doubled down on the lender’s previous warning shots where banks have claimed the FCA has not followed the legal clarity laid out by the Supreme Court.
The FTSE 100 titan has pulled no punches in its criticism of the Financial Conduct Authority’s (FCA) redress scheme for the car-misselling scandal, accusing the watchdog of misinterpreting the Supreme Court’s August ruling.
Nunn said: “When you look at the implication of what’s been proposed by the FCA, it’s going to potentially take 20 years of profitability off the car finance industry.”