Morocco's Bank of Africa reports 26% rise in first-quarter profit
Net banking income rose 11% to 5 billion dirhams, the bank said, noting an improvement in interest and fee margins.
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BBC News
an hour ago
- BBC News
Car finance payouts limited, but lenders aren't off the hook
There may well be a few sighs of relief from senior finance company and banking executives following the Supreme Court's ruling, but it is unlikely you will hear the champagne corks verdict does almost certainly reduce the potential compensation bill significantly. Lenders no longer face the prospect of having to pay £30bn to £40bn to aggrieved car buyers. The likelihood of the government stepping in also appears to have receded the industry is not off the hook. The Financial Conduct Authority may still open a redress scheme for cases where dealers had a financial incentive from lenders to ramp up interest rates on loans as much as possible. The Supreme Court's ruling also upheld one consumer claim, in which the commission payments were deemed unfair – and that could provide a template for others to follow. All of this means the compensation bill could still be in the Supreme Court's intervention has been eagerly awaited since October, when the Appeal Court issued a verdict in three test cases which could have triggered an avalanche of compensation each case, people who had bought cars on finance claimed they were partially unaware that the deal had involved a commission payment being made by the lender to the car dealer. They claimed that in law the commissions amounted to bribes, or secret Appeal Court judges agreed, essentially saying that commission payments made by a finance company to a dealer for arranging a car loan were illegal if the car buyer had not given his or her "informed consent".They also concluded that a car dealer had a "fiduciary duty" towards the car buyer when it came to arranging a car loan. In other words, the dealer should set his or her own interests aside, and act purely on the customer's meant that millions of car buyers could potentially claim compensation – if they could show that the dealer had not specified what commission payments they were receiving for lining up a finance deal. It was not enough for the details to be buried in small had feared that this would lead to an avalanche of claims against them – and that the same arguments could be used to challenge other kinds of consumer finance agreements as well, potentially increasing the compensation bill still the Supreme Court threw very cold water over those arguments. The President of the Court, Lord Reed, dismissed the idea that car dealers had a "single minded duty of loyalty" to their customers, and insisted they "plainly and properly" had personal interests in the finance agreements they were involved ruling clearly blocks off what could have been a very wide avenue for compensation claims. However, the court did side with one of the claimants. In the case of Marcus Johnson, a factory worker, it decided that the finance agreement was "unfair" under the terms of the Consumer Credit Act. This was because the size of the commission payment was very large, and because Mr Johnson had been misled about the relationship between the dealer and the lender. He was, they said, entitled to say this could open the doors for other cases in which the commission payments are seen to be is also a key question the Supreme Court ruling does not answer. This is what should happen in cases involving so-called Discretionary Commission Agreements (DCAs). These were finance deals in which the car dealer could set the interest rate of a loan, within a set scale. The higher the rate, the more commission they would be paid – and the customer would be unaware of the Financial Conduct Authority banned such deals in 2021. It is now considering whether to launch a redress scheme for consumers who were affected by them. If it goes ahead, millions of car buyers could still have a claim, though it is not clear how much compensation they would to Richard Barnwell, a financial services advisory partner at accountancy firm BDO, the bill could still be substantial."We believe there is still a potential for redress, for example, if discretionary commission arrangements are deemed to be an unfair relationship, redress could still be from to £5bn to £13bn or more," he analysts agree. According to Martin Lewis, who runs the MoneySavingExpert website, "the Supreme Court has certainly narrowed the number of people who will be able to reclaim car finance. I think you're probably talking the lower end of £10bn, as opposed to £40bn."That £10bn would still be a significant figure. But the finance industry appears to have avoided the potential free-for-all rush to claim compensation the earlier verdict had threatened to spark while the Treasury says it will "work with regulators and industry to understand the impact for both firms and consumers", the BBC understands that the likelihood of the government intervening with retrospective legislation to protect financial firms has now diminished law of bribery only applies to persons who owe a single-minded duty of loyalty and are therefore bound to have no personal interest in the matter that they are dealing the present case the car dealers plainly and properly have a personal interest in the dealings between the customers and the finance companies.
Times
2 hours ago
- Times
Supreme Court puts brakes on car finance payouts but it's not end of road
All it took was a statement from the Financial Conduct Authority in January last year announcing it would 'undertake work' on car loans to set off more than 18 months of turmoil in one of Britain's biggest consumer finance markets. Now, with a landmark ruling on Friday from the country's highest court, consumers, motor finance lenders and car dealers finally have some clarity on the potential scale of any consumer compensation the industry might have to pay. It is good news for the lenders who are on the hook for any redress. This is because the Supreme Court overturned the main arguments put forward by the consumers who brought the cases that might have resulted in a compensation crisis for motor finance providers akin to the £50 billion payment protection insurance (PPI) redress saga. • Consumers denied car finance payouts by Supreme Court While lenders may still end up paying billions in compensation, the worst-case scenario for the industry, which one City analyst had pegged at £44 billion, appears to have been avoided. It is the latest twist in a scandal that had caused consternation at the very top of the government over fears of the size of the hit lenders may face. While motor finance has been around since early in the 20th century, it has exploded in popularity in the UK in recent decades. Between 80 per cent and 90 per cent of new cars are bought using finance. The market is huge, with £18.4 billion in finance provided for 646,080 new cars and £21.3 billion for 1.4 million used vehicles in the 12 months to May, according to the Finance & Leasing Association, which represents the industry. The issue at the heart of the furore is the commissions that lenders pay to car dealers acting as brokers in the sale of motor finance. • Discretionary car finance commission was a disaster waiting to happen They have been in the crosshairs of the FCA, the City regulator, for almost a decade. In 2017, the authority announced a review of the car loans industry over concerns 'there may be a lack of transparency, potential conflicts of interest and irresponsible lending'. This culminated in the FCA's decision to ban so-called discretionary commissions. Under this payment model, the commission paid to the dealer was linked to the interest rate paid by the borrower, which the dealer was allowed to set. This created an obvious conflict because dealers earned more commission if they charged higher interest rates. The authority's ban came into force in January 2021. The regulator estimated that it would save consumers £165 million a year. Yet controversy over commission did not go away. Customer complaints to motor finance firms about pre-ban deals surged. Borrowers argued that commissions had not been disclosed, car dealers had failed to give impartial advice and that they therefore had not received the best deal. There was also a rise in county court claims. Most grievances were rejected by firms and went up to the Financial Ombudsman Service, an independent body that adjudicates on unresolved complaints. It published its first two decisions on representative cases in January last year. One of the disputes related to Black Horse, the car loans division of Lloyds Banking Group that is the UK's biggest motor finance provider, and the other related to a unit of Barclays. In both instances the ombudsman found against the lenders, deciding that they had acted unfairly because the discretionary commissions had not been disclosed to the borrowers, and that they should pay compensation. This immediately prompted the FCA to begin another review of the market, examining discretionary commissions as far back as April 2007, blindsiding the industry with its wide-ranging, retrospective nature. This fuelled City speculation that car loan providers, which include the lending arms of car manufacturers as well as banks, would ultimately be forced to pay consumer compensation totalling billions of pounds and, inevitably, a whole industry of claims management companies and law firms seeking to cash in on redress claims quickly sprang up. • 23m people expecting compensation for car finance scandal Industry data compiled by the authority covering most of the car loans market suggests there were about 25.9 million motor finance deals arranged between 2007 and the end of 2020. Some 14.6 million of these included discretionary commissions of about £8.1 billion. It was just weeks after the authority started its review that the fallout on lenders began to materialise. The first casualty was Close Brothers, a London-listed merchant bank that has large exposure to motor finance relative to the size of its wider loan book. Its shares had slumped following the regulator's announcement after investors identified the 147-year-old lender as being at risk from the inquiry. Their fears were confirmed in February last year when Close revealed it was scrapping its dividend to bolster its balance sheet to prepare for possible compensation payouts. It has since taken a series of emergency actions to boost its capital position by more than £400 million. A week after Close Brothers axed its dividend, Lloyds announced it was setting aside £450 million to cover its potential customer redress bill. This was increased by Lloyds to £1.15 billion this February following a seismic ruling last autumn by the Court of Appeal, which found against lenders MotoNovo and Close in three cases brought by consumers. It was this judgment, which stunned the industry because of its far-reaching implications, that was referred to the Supreme Court after the lenders involved appealed. While the FCA's continuing review relates to discretionary commissions, the Court of Appeal ruled that any commission was unlawful if it was not properly disclosed to, and consented to, by consumers, and that dealers, in their capacity as brokers, had to act in the best interests of their customers because they owed them a fiduciary duty. It also ruled that lenders were liable to compensate consumers for the commissions. By going much further than what had been required under regulation, it immediately caused chaos in the motor finance market, as lenders halted operations to check that they complied with the ruling, and prompted several banks to follow Lloyds by making compensation provisions. They included Santander UK, which set aside £295 million, Close, which has earmarked £165 million, and a £90 million provision by Barclays. The UK motor finance arm of BMW set aside more than £70 million, although this provision pre-dated the Court of Appeal ruling. All of this significantly increased estimates for the overall bill faced by the industry. Some lawyers warned the ruling could have implications for commissions in other areas involving brokers, such as asset finance and energy. • Car finance revival as memories of the mis-selling scandal fade The prospect of another PPI-style scandal unnerved the Treasury, not least because Rachel Reeves, the chancellor, has placed fostering the financial services at the heart of her efforts to boost Britain's faltering economy. This risked being undermined, not just by a big compensation crisis for lenders, but also by the frenzy of activity by claim-chasing companies and law firms that have been seeking to feast on the scandal. Yet the Treasury can breathe a sigh of relief. The Supreme Court on Friday rejected the idea that dealers owed a fiduciary duty to their customers and also dismissed the argument, which had been upheld by the Court of Appeal, that the commissions amounted to a bribe. The industry is not completely out of the woods, however. While the Supreme Court upheld two of the appeals made by the lenders, it backed consumers in the third case. • Common sense has triumphed over compensation culture The FCA also still has to make a decision about discretionary commissions. It previously signalled that it was likely to impose a redress scheme on the industry over these arrangements. It said on Friday night that it would confirm whether it will consult on a compensation scheme before markets open on Monday. Even so, the Finance & Leasing Association hailed the judgment as 'an excellent outcome'. The Treasury, which had been considering bringing in legislation to supersede the court ruling if it threatened a huge compensation blow to lenders, signalled that it would not intervene, with a spokesman saying it respected the judgment. Kate Scott, a partner at the law firm Clifford Chance, called it 'an eminently sensible, commercial decision from the Supreme Court. As any man on the street will confirm: car dealers act in their own interest'.
Daily Mail
2 hours ago
- Daily Mail
The 37 taxes you pay and why it now takes £3.1m to feel 'wealthy' - This is Money podcast
While the average household pays £16,700 in direct tax on income, our audit shows this is just the tip of the iceberg. We all pay a multitude of other taxes, from air passenger duty to environmental levies on our energy bills. Lee Boyce, Simon Lambert and Georgie Frost discuss what the total sum is - and that our tax rate is more like 57 per cent. And tax rises don't always bring in more cash for the Treasury coffers. As the Government weighs up introducing yet another tax - this time a wealth tax - we explore why despite the allowance being slashed the capital gains tax take is down and what it means for the Chancellor's plans. How much you need to feel wealthy in different areas of Britain? Does £1million still cut it? The six burning questions everyone is asking financial advisers right now… and their expert answers And we answer a reader query: Could I give £250 gifts to 400 people who then pay them to my daughters to beat inheritance tax on £100,000? Listen to the This is Money podcast We publish the podcast every Friday on This is Money and at Apple Podcasts, Spotify, Amazon Music and more. Search for it at your favourite podcast platform. To download Apple Podcasts go to the App store. On Android devices, go to the Google Play store to download the podcast app of your choice. You can press play to listen to this week's full episode on the player above, and wherever you get your podcasts please subscribe and review us if you like the podcast. You can also listen to the latest episode, find the archive and join in the debate in reader comments on the This is Money podcast page.
