Close Brothers raises provisions as car finance claims storm gathers pace

Close Brothers has been hit by the growing car finance claims scandal and is making another $180 million increase to its motor finance provision to cover claims costs [1]. The move underscores how deeply the UK’s car finance scandal has affected the sector, with financial institutions bracing for billions in potential redress payments. Following the Financial Conduct Authority’s (FCA) consultation launched on 7 October 2025 [2], the industry is now facing its most comprehensive regulatory intervention yet: one that could see millions of motorists compensated for mis-sold finance agreements dating back more than a decade.

Why Close Brothers is raising its motor finance charge now

Close Brothers’ decision arrives in the midst of an escalating regulatory regime and a sea change in how motor finance is viewed. The lender cited “increased provisions for residual exposures” tied to its motor finance arm, signalling it expects significant outflows to settle past complaints or pay redress.

A $180 million boost is significant. It impacts the firm’s near-term profitability, but it’s also a message sent to the entire industry. Lenders know they’ll be held more accountable. Consumers are looking at car finance refunds or compensation for mis-sold deals.

Close Brothers’ actions echo those of rivals, many of which are already setting aside funds to address historical wrongs. In part, this is because the FCA expects to pay compensation to millions of mis-sold car finance customers next year, a prospect that looms large over the entire motor finance ecosystem.

FCA consultation and the proposed redress scheme: What you need to know

On 7 October 2025, the Financial Conduct Authority (FCA) launched a consultation paper (CP 25/27) proposing an industry-wide compensation scheme [3] to resolve unfair car finance agreements across the board. The consultation will run until 18 November 2025.

Under the proposals:

• The scheme would cover motor finance agreements entered into between 6 April 2007 and 1 November 2024.
• The FCA estimates that customers will receive around £700 per agreement, on average.

The consultation includes detailed technical annexes describing how redress would be calculated, how claims should be handled, and how the scheme would interface with existing complaint mechanisms. The goal is to provide a consistent, efficient mechanism for resolution rather than leaving consumers to navigate disjointed individual complaints.

The FCA acknowledges that some consumers may complain early or have already had disputes with their lender or via the Financial Ombudsman Service (FOS). But by centralising the process, the regulator aims to streamline outcomes, particularly for those who have not yet engaged in formal complaint activity.

Within the consultation, the FCA notes that lenders are only required to contact customers they can trace. Thus, if you’ve moved house or changed contact details, you risk being overlooked. Ensuring that your finance history and contact data are up to date will be critical in making sure you don’t miss out on redress.

As the proposed scheme would not launch immediately, the FCA is targeting a start in 2026. Until then, consumers retain their rights.

What Should You Do Now?

The FCA has now proposed an industry-wide compensation scheme for unfair car finance agreements between April 2007 and November 2024, with average payouts expected to be around £700 per agreement.

You can still choose to complain directly to your lender, go to the Financial Ombudsman Service, or wait for the FCA’s redress scheme, expected to begin in 2026, all of which are free to do.

Why take action now?

• If you’ve already complained, you’ll be among the first to be contacted once the FCA scheme begins.
• Lenders are only required to contact customers they can trace. If you’ve moved or your old details have changed, it’s worth ensuring your complaint and contact info are up to date.
• Complaining now also means your case is already logged and ready for review when the scheme starts.
• If you haven’t complained yet, Reclaim247 can help trace your finance history and submit a complaint on your behalf, using just your name, address, and date of birth. No paperwork. No hassle. No win, no fee.

This dual path, complaining early while awaiting a central scheme, is likely to be the prudent strategy for many consumers eyeing car finance mis-selling claims.

Considering the services of a claims management company?

Faced with such a choice, many consumers are naturally tempted to consider the services of a claims management company to assist them. Given the potential complexity of historic paperwork, dealer relationships and lender protocols, the services of a professional finance claims expert to guide them through the redress process, highlight what information they may be missing, provide an idea of likely compensation and act on their behalf with the lender or scheme administrators can make the claims process much less daunting.

But choose carefully, and sensibly. A good claims management company works openly and fairly with you, only ever charging on no win, no fee basis, and will never put pressure on you to accept or reject a settlement offer: you are in control at all times. Partnering with the right company, preferably a finance claims specialist with a proven history of success, can go a long way to minimising the stress that otherwise could be added to your injury.

One helpful resource you might consult is the latest updates on car finance claims in the UK to know the proposed compensation plan for mis-sold motor finance agreements. Also, before signing up, check how long the service typically takes (for example, how long does Reclaim247 take to process a case) and whether it handles PCP claims (many mis-selling cases relate to payment-linked PCP arrangements).

Also bear in mind: what happens if a company ignores the ombudsman after it issues a ruling? In such cases, you may escalate to enforcement bodies or seek legal remedy. Choosing a provider that understands the wider regulatory architecture is an advantage.

Final thoughts: What lies ahead in the car finance claims landscape

Close Brothers’ significant charge increase is only one illustration of the broader financial strain and risk borne by lenders in the wake of mounting car finance claims. The industry is entering a phase where mis-selling allegations, under-recovered commission practices, and inconsistent past oversight will be under retrospective review.

For consumers, the coming months are critical. Whether you have already lodged a complaint or are only just thinking about your options, remaining active will protect you from being overlooked or disenfranchised. The proposed redress scheme [4] will provide a more consistent framework but acting early will ensure your claim is primed and ready.

You may feel you need help and support with the claims process or are unsure of the next steps, in this instance instructing an appropriately regulated claims management company may be beneficial. Whichever option you choose, the car finance scandal that is continuing to unravel is not just a legal issue, but a financial moment that could change your rights and your financial outcome for years to come.

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References:

1. Close Brothers has been hit by the growing car finance claims scandal and is making another $180 million increase to its motor finance provision to cover claims costs - https://www.reuters.com/sustainability/boards-policy-regulation/close-brothers-lifts-motor-finance-charge-by-about-180-million-2025-10-14/
2. Financial Conduct Authority’s (FCA) consultation launched on 7 October 2025 - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme
3. the Financial Conduct Authority (FCA) launched a consultation paper (CP 25/27) proposing an industry-wide compensation scheme - https://www.fca.org.uk/publication/consultation/cp25-27.pdf
4. proposed redress scheme - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme