(Corrects size of provision to 295 million pounds, not 293 million pounds, in paragraph 2) (Reuters) -Santander UK on Wednesday said it has decided not to publish its third-quarter results as the
Santander UK Questions Motor Finance Redress Scheme Amid Q3 Delay
Santander UK's Position on FCA Redress Scheme
(Reuters) -Santander UK criticised Britain's motor finance redress scheme and said on Wednesday it decided not to publish its third-quarter results as it seeks clarity on the financial regulator's proposals related to the mis-selling scandal.
The UK unit of Spain's Santander said that it did not expect a material impact on its capital or liquidity even in the event of any potential increase to its existing motor finance provision, which was previously estimated at 295 million pounds ($396 million) to cover compensation.
Asked if Santander UK would have to set aside more provisions, Santander's Chief Executive Officer Hector Grisi told a press conference: "For the moment, no, because the FCA report is provisional and still under public consultation."
Implications for the Automotive Industry
Other banks in the UK, such as Lloyds and Barclays, recently set aside additional charges related to the scheme to compensate consumers who signed unfair car loans between 2007 and 2024.
Concerns Over Consumer Impact
UK REGULATOR'S PROPOSED COMPENSATION SCHEME
Regulatory Challenges and Uncertainties
Many of the loans, which were packaged up by car dealers, stem from discretionary commission agreements, in which lenders allowed the dealerships to earn higher fees by ramping up the interest rates consumers paid on the loans.
In August, Britain's Financial Conduct Authority proposed a redress scheme for consumers with compensation claims following a Supreme Court ruling, estimating the cost at between 9 billion and 18 billion pounds.
Santander UK said on Wednesday it was reviewing the consultation to understand its potential implications, noting that the FCA's proposed approach differed in important respects from the Supreme Court ruling.
It also said there was uncertainty regarding the final scope, methodology and timing of any redress scheme that may ultimately be implemented.
"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," Santander's UK Chief Executive Mike Regnier said in a statement.
He also warned that without such change, the unintended consequences for the car finance market, the supply of credit and the resulting negative effect on the automotive industry and its supply chain could significantly hurt jobs, growth and the broader British economy.
"This could also cause significant detriment to the consumer," he added.
($1 = 0.7451 pounds)
(Reporting by Yadarisa Shabong in Bengaluru and Jesús Aguado in Madrid; Editing by Janane Venkatraman and Emelia Sithole-Matarise)
