MADRID (Reuters) -The UK arm of Spain’s Santander on Monday postponed the release of its third-quarter results while it assesses the impact of a court ruling on motor finance commissions, although the parent bank said it did not expect a hit to financial targets in 2024. A London court ruled last week that motor […]
MADRID (Reuters) -The UK arm of Spain’s Santander on Monday postponed the release of its third-quarter results while it assesses the impact of a court ruling on motor finance commissions, although the parent bank said it did not expect a hit to financial targets in 2024.
A London court ruled last week that motor finance brokers must fully inform customers about the existence and size of commissions when arranging car loans, amid a wider review by Britain’s financial regulator into sales practices in the industry.
In a regulatory filing late on Monday, Santander UK said it would delay announcing its financial results that had been set for Oct. 29. Santander in Spain, the parent bank , will still report its results on Tuesday.
Santander UK said it was “not practicable to reliably estimate at this point in time the extent of any potential financial impact ” and that it was taking time to consider the judgment and the potential exposure it creates for the bank.
A spokesperson for Spain-based Santander, which operates in multiple countries, said the bank does not expect the “FCA’s review to affect the achievement of the group financial targets for 2024.”
The UK Court of Appeal determined that a motor dealer who arranges finance for a customer has duties to disclose to the customer commission from lenders, and that lenders will be liable for non-disclosure by the dealer. Analysts said the ruling appeared to widen the scope of possible cases of mis-selling that could come under review.
Shares in large motor finance providers Close Brothers and Lloyds slid sharply on Friday and fell again on Monday following the ruling.
Analysts have estimated the sector’s total compensation bill could reach 16 billion pounds ($20.79 billion), potentially making it the costliest consumer banking scandal in Britain since the faulty sales of payment protection insurance.
Santander UK said the judgment set a “higher bar for the disclosure of and consent to the existence, nature and amount of any commission paid by a lender than had been understood prior to the decision to be required under FCA or other regulatory guidance and previous legal authorities.
The UK lender said it disagreed with the ruling and noted that the defendants had announced they would appeal to the UK’s Supreme Court .
(Reporting by Jesús Aguado; Editing by Emma Pinedo and Sonali Paul)
