LONDON — Close Brothers Group plc Chief Executive Officer Mike Morgan has defended the lender’s practices [1] amid allegations of mis-sold car finance, as UK regulators prepare a major compensation scheme for affected borrowers. The bank insists customers received fair value, despite a surge in car finance claims and PCP claims linked to the ongoing car finance scandal.

CEO pushes back on mis-selling allegations

Morgan said customers were aware of the costs involved when entering finance agreements, rejecting claims of widespread car finance mis-selling.

“I would contend you knew what you were paying for this car and you got the car,” Morgan said, adding that customers “got value throughout this.”

He also argued the situation differs from the payment protection insurance crisis, which resulted in around £50 billion in payouts, suggesting the current car finance claims landscape reflects a different level of consumer impact.

Compensation scheme under scrutiny

The Financial Conduct Authority is expected to outline details of a redress programme that could cover around 14 million agreements made between 2007 and 2024 [2]. Estimates suggest average payouts of roughly £700 per customer, with total liabilities reaching about £11 billion [3].

The proposed scheme has drawn criticism from multiple sides. Morgan said the structure does not accurately reflect customer losses and described it as disproportionate. Meanwhile, some MPs have argued that affected motorists should receive higher car finance compensation, potentially averaging £1,200.

If implemented, the scheme could lead to a wave of car finance refund and PCP refund claims across the UK.

Rising financial exposure for lenders

Close Brothers has already set aside approximately £300 million to cover potential liabilities tied to car finance claims. However, short-selling firm Viceroy Research claimed the lender may face significantly higher costs.

According to Viceroy, Close Brothers may have underestimated its exposure [4], with liabilities potentially rising to £572 million in a more optimistic scenario and as much as £1.23 billion in a worst-case outcome.

The lender has strongly rejected those claims.

Commission structures at centre of scandal

The wider car finance scandal focuses on commission models used by lenders and car dealers. In some cases, dealers were incentivised to offer higher-interest agreements, increasing their commissions.

Critics argue this system may have led to mis-sold car finance deals, particularly in personal contract purchase agreements, which are now at the centre of many PCP claims.

Market reaction and industry impact

Investor concerns have already been reflected in Close Brothers’ share price, which fell sharply following renewed scrutiny of its exposure. The company has also cut costs, including reducing its workforce by around 600 roles [5].

Industry analysts say the scale of potential car finance compensation could reshape the motor finance market, leading to tighter regulation and greater transparency.

Outlook for car finance claims

As regulatory decisions approach, claims firms are reporting increased demand from consumers seeking to determine eligibility for car finance refund and PCP refund opportunities, and sometimes, even through a car finance refund check online.

The final structure of the FCA’s scheme will be critical in determining how many borrowers receive compensation and how much lenders ultimately pay.

The case is expected to set a precedent for how historic car finance mis-selling cases are handled, with long-term implications for both lenders and consumers across the UK.

_________

References:

1. Close Brothers Group plc Chief Executive Officer Mike Morgan has defended the lender’s practices - https://www.thisismoney.co.uk/money/markets/article-15667091/Close-Brothers-claims-car-customers-got-good-value-finance-rip-off.html
2. The Financial Conduct Authority is expected to outline details of a redress programme that could cover around 14 million agreements made between 2007 and 2024 - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme
3. Estimates suggest average payouts of roughly £700 per customer, with total liabilities reaching about £11 billion - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
4. Close Brothers may have underestimated its exposure - https://www.ft.com/content/e2386fb4-c8a9-44b5-9086-eb156d07dc7d 
5. The company has also cut costs, including reducing its workforce by around 600 roles - https://www.theguardian.com/business/2026/mar/17/close-brothers-banking-group-cut-jobs-car-finance-shares