A recent ruling from the Court of Appeal on motor finance commissions is starting to grate on motor and property finance specialist S&U PLC (LSE:SUS).
Following an investigation by the Financial Conduct Authority (FCA), the ruling on discretionary commission arrangements has cast a pall over the motor finance sector.
Lenders face potentially billions of pounds in compensation bills, which Lloyds Banking Group PLC (LSE:LON:LLOY) has warned could be a threat to the UK economy.
For S&U, it has been blamed for lower-than-expected net receivables in its Advantage motor finance wing.
In a trading update for the period of 1 August-10 December, Advantage net receivables totalled £295 million, or 10% lower than the previous year.
Trading conditions “have been burdened by the recent Court of Appeal decision in October which sought to impose a new, but retrospective, duty of care on lenders and brokers throughout the sector”, said S&U.
S&U laid some of the blame on “opportunistic” claims from claims management companies (CMCs) advertising on social media.
“We remain confident that the introduction of a formal charging regime for CMCs legislated this year will deter spurious claims in future,” S&U added.
S&U also took aim at the Autumn Budget, “which has plunged consumer and business confidence to the lowest levels for four years” and has “curtailed the sector's growth ambitions and cast doubt over the new government's plans to 'Get Britain Working’”.
A steady showing in the Aspen Bridging property finance segment meant S&U’s group-wide net bookings of £449 million in the period were similar to last year.