Could there be some respite for Lloyds Banking Group PLC (LSE:LLOY), Close Brothers Group PLC (LSE:CBG) and the other smaller players saddled with a potential £30 billion bill for alleged motor finance mis-selling?
Next month will see the start of a Supreme Court appeal hearing hoping to overturn an earlier, potentially costly ruling.
Brought by Close Brothers and FirstRand Bank, the case challenges an October 2024 Court of Appeal decision that found it unlawful for car dealers to receive undisclosed commission payments from lenders.
Shore Capital, picking through the entrails of a comprehensive update by S&U, one of the smaller players, finds some crumbs of comfort, even if the appeal fails.
The broker lasered in on a trading update penned by S&U's chairman, Anthony Coombs, in which he states: "My view is that even should the Supreme Court uphold the lower court's decision in principle, any 'harm' found to have been suffered by consumers will be so marginal as to make demands for redress minimal.”
ShoreCap calls the observation "particularly interesting", adding: "While this may be focused specifically on S&U’s position, should Mr Coombs’ view prove correct then this could have positive read across to other listed companies with material UK motor finance exposure."
Shares of Lloyds were flat, while Close Brothers stock was trading 2% lower.