Finance
Santander UK delays Q3 results to assess motor finance ruling impact
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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
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)
Frequently Asked Questions about Santander UK delays Q3 results to assess motor finance ruling impact
1What is motor finance?
Motor finance refers to the various financial products and services that help consumers purchase or lease vehicles, including loans and leasing agreements.
2What is a court ruling?
A court ruling is a decision made by a judge or court regarding a legal case, which can establish legal precedents and affect future cases.
3What is consumer protection?
Consumer protection refers to laws and regulations designed to ensure the rights of consumers are upheld, preventing unfair practices by businesses.
4What are financial targets?
Financial targets are specific goals set by a company regarding its financial performance, such as revenue, profit margins, or return on investment.
5What is financial regulation?
Financial regulation involves rules and laws that govern financial institutions and markets to maintain stability, protect consumers, and prevent financial crimes.
