The comments appeared to have significantly boosted Close Brothers' share price.

Close Brothers said today that it can “comfortably” absorb the cost of the UK financial regulator’s motor finance redress programme announced late last month. 

The announcement helped send the UK-listed bank’s shares up almost 18 per cent this morning. The broader stock market gained following US President Donald Trump’s announcement of a two-week ceasefire with Iran, a move that also prompted a sharp fall in crude oil prices.

Close Brothers, which has spun off parts of its business – such as its Winterflood brokerage arm – to shore up its capital in anticipation of payouts related to motor finance mis-selling, said the estimated redress cost, as published, is about £320 million ($427.4 million), which is near to Close Brothers’ own provision. 

The sum can be absorbed by existing capital, the bank said in a statement. 

At the core of the issue were commissions paid by lenders to car dealerships when they offered loans to customers. The Financial Conduct Authority and courts have said that these were insufficiently disclosed to consumers and encouraged charging higher interest rates. 

Shares in Close Brothers have languished amidst uncertainties about what the FCA would impose on the bank, and other lenders – such as Barclays and Lloyds. In March, a short-seller called Viceroy Research, based in the US, claimed Close Brothers had misrepresented the scale of provisions it will need to redress the motor finance issue. 

Close Brothers said in its statement today that it will continue to closely monitor any further legal, regulatory and industry developments and is considering its next steps.

The FCA said in late March that it had revised its redress approach, cutting the total amount to around £7.5 billion from the £9.2 billion sum in its earlier consultation process. When administration fees are added, the total cost is £9.1 billion.

The bank said that the scheme as published, if recognised in isolation, would result in a provision of around £320 million on a pro forma basis as of 31 January 2026. This compares with the group's IAS 37 provision of £294 million as of 31 January 2026. Such a figure cuts the group’s Common Equity Tier 1 capital ratio by about 25 basis points, to 14 per cent, on a pro forma basis as of 31 January this year. “This remains comfortably ahead of the group's medium-term target of 12-13 per cent,” Close Brothers said. 

(Editor's note: After the tumult of recent months, today's statement – judging by the share price reaction – will bring a sigh of relief for some investors and the bank's CEO, Mike Morgan (main photo), who has had to manage the process. The redress process will not, however, be straightforward. But the FCA's announcement and subsequent developments have at least given something that shareholders and clients crave – a measure of clarity.)