(Reuters) -Britain's Secure Trust Bank said on Wednesday it would stop new lending in vehicle finance, signalling a strategic shift as the bank withdraws from an underperforming segment amid industry-wide uncertainty after a court ruling on motor finance.

London's Court of Appeal ruled in October that motor finance brokers must fully inform customers about commissions on new car loans, leading some lenders to temporarily pause writing and collecting such loans.

Shares of key motor finance providers Close Brothers, Lloyds and others fell sharply after the ruling and Secure Trust Bank shares plunged to a record low of roughly 348 pence in November.

The company warned about profit in November and said the pause in loan collections led to a higher volume of loans reaching default status and added that while it had restored collections to normal levels, it was taking longer than expected to recover funds.

Since then, its shares have recovered. Early on Wednesday, the shares jumped nearly 5% to 836 pence.

The lender's vehicle finance segment accounted for about 30% of its adjusted operating costs in 2024 and posted a loss before tax and pre-exceptional items of 21.8 million pounds ($29.9 million).

On Wednesday, it said it will continue to support its existing customers and loan portfolio in vehicle finance, adding that it expects 284 roles to be at risk by 2030, including 78 roles in 2025.

As at June 30, the average consumer loan length outstanding for vehicle finance was 37 months and the longest contractual loan agreement was 60 months, Secure Trust Bank said.

The firm expects to incur restructuring costs of about 5 million pounds and said it will streamline its cost base as the loan book runs down, enabling more than 25 million pounds of operating costs to be removed by 2030.

($1 = 0.7286 pounds)

(Reporting by Chandini Monnappa in Bengaluru; Editing by Rashmi Aich and Mrigank Dhaniwala)