S&U PLC (LSE:SUS) chairman Anthony Coombs talked with Proactive about the implications of the recent Supreme Court decision and the FCA’s initial guidance on motor finance redress.
Coombs welcomed what he described as a “sensible and very balanced” ruling, which he said supports both customers and regulatory fairness.
He explained that Advantage Finance, S&U’s motor finance subsidiary, has never used discretionary commission arrangements — the practice at the centre of recent scrutiny. Instead, the company uses non-discretionary commissions, paying the same rate to brokers regardless of customer profile or deal size.
“We didn’t think it was right,” Coombs said of DCA commission models. “We didn’t think it was in the customer’s interest.”
He added that based on the criteria set out by both the Supreme Court and the FCA, S&U does not expect the redress scheme to impact Advantage Finance.
Looking ahead, Coombs said the ruling should reinforce market confidence and provide a stable foundation for regulatory expectations. He noted that S&U is already seeing a significant uptick in business activity, with more details expected in the upcoming trading statement.
Coombs also highlighted concerns about the role of claims management companies, which he said have imposed unnecessary costs across the industry and are now rightly being scrutinised.
Proactive: Anthony, very good to speak with you. In your statement this morning, you described the Supreme Court decision as a victory for common sense. What does it mean for S&U and Advantage Finance?
Anthony Coombs: Well, in my view, it's very good news indeed. We're very pleased with what I thought was a sensible and very balanced Supreme Court decision. It balanced the interests of consumers — which we've always held in very high esteem because they are our loyal customers — with sensible regulation, and a sensible view of fiduciary duties. The Supreme Court decided that fiduciary duties weren’t appropriate for this part of the motor finance market, nor, I suspect, for other parts of the finance market as well.
And since then, we've also had broad details — obviously they are going to consult in October — from the FCA on any redress schemes. Looking at the details and the criteria which both they and the Supreme Court set down, we don’t assume that's going to impact Advantage Finance, our motor finance subsidiary, at all. Nor should it, and I’m very pleased by that.
Proactive: Advantage has stated that it never used discretionary commission models. Can you explain how your lending model differs from those under scrutiny and why that matters to investors?
Anthony Coombs: The discretionary commission model basically said that certain lenders were paying higher commissions to brokers who guided customers to higher interest rate models or added charges through credit. We didn’t think that was right. We didn’t think it was in the customer’s interest. We’ve therefore never paid discretionary commissions. We've always done non-discretionary commissions. We pay the same to our brokers, irrespective of the kind of deal or the type of customer that we get.
Proactive: You mentioned the ruling could boost industry confidence and investment. How does this position S&U for growth in the coming months, particularly as the recovery continues?
Anthony Coombs: I think it has a huge effect. We're already seeing — and we’re going to talk about this in our trading statement next week — a significant uptick in the amount of business we’re doing, in both businesses, which is very encouraging. This sets the groundwork for regulation for some time to come.
One of the things I was most pleased about was the FCA reaction to the redress scheme following the Supreme Court decision, which I think will be proportionate, balanced and manageable. They also concentrated — rightly in my view — on the activities of CMCs, these claims management companies. Whether they be standalone or lawyers acting as CMCs, they've been out of control, egregious, and have imposed huge additional costs on lenders throughout financial services. They’ve really been acting for their own interests rather than those of the customers they claim to represent. I think CMCs are rightly going to be reined in, and in my view, that’s good for consumers too.
Proactive: And I look forward to speaking to you after the release of that trading update next week. Thank you very much for taking the time today.