11th Dec 2024 16:19
(Alliance News) - S&U PLC shares rose on Wednesday, despite its warning that the motor finance scandal is causing "chaotic" conditions in the market while the Budget has weighed heavy on consumer and business confidence.
Shares in the specialist lender were up 1.9% at 1,472.44 pence in London late on Wednesday afternoon.
S&U, which provides car finance through Advantage Finance, said trading conditions had been "burdened" over the first half of its financial year.
The company referred to a recent ruling in the Court of Appeal that it was unlawful for car dealers to receive commission from lenders without fully informing customers of the arrangement.
S&U said the decision "sought to impose a new, but retrospective, duty of care on lenders and brokers throughout the sector".
It added that the ruling caused "chaotic market conditions" which led to some lenders pausing lending altogether. This contributed to a 33% drop in advances, meaning short-term credit, so far this year compared with last year.
"Together with a poorly received government Budget in the same month, which has plunged consumer and business confidence to the lowest levels for four years, this has curtailed the sector's growth ambitions and cast doubt over the new government's plans to 'Get Britain Working'," S&U said.
Net receivables for Advantage Finance – meaning the amount of money owed to the lender that it expects customers to be able to pay – were GBP295 million at the end of the period, a 10th lower than the prior year.
Nonetheless, S&U said it was lifted by a stronger financial performance for its property bridging finance arm Aspen Finance.
This was partly thanks to growing demand from smaller entrepreneurs to "fill the gap" in the Government's house building targets, which has created more bridging opportunities, it said.
Looking ahead, Chair Anthony Coombs commented: "Whilst Aspen continues to prosper in the bridging finance sector, these are undoubtedly challenging times for Advantage and for the UK motor finance industry.
"It is very important that the government, our regulators and the courts collaborate with industry participants to ensure an environment in which S&U and the sector as a whole, can maintain responsible lending and consumer access to fair credit. As it has for the past 86 years, S&U will continue to play its part."
Also on Wednesday, London-based bank, broker and asset manager Close Brothers Group PLC on Wednesday said the UK Supreme Court gave it permission to appeal late October's Court of Appeal judgment in Hopcraft versus Close Brothers Ltd.
The Supreme Courts' decision follows the UK Financial Conduct Authority, which last month said it would consult on extending the time motor finance firms have to handle complaints about commission payments.
The Court of Appeal had also ruled against South African financial services group FirstRand Ltd in Johnson versus Firstrand Bank Ltd and Wrench versus Firstrand Bank Ltd. On Wednesday Firstrand, too, said it received permission to take its legal fight in the UK motor finance market matter to the Supreme Court.
The Court of Appeal found that FirstRand's London branch intentionally included a commission disclosure in the terms and conditions in such a way as to make it "unnoticeable" to the customer.
FirstRand expects the Supreme Court to hear its appeal sometime between mid-January and mid-April 2025.
By Anna Wise, PA Business Reporter
source: PA
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