Close Brothers Group PLC on Friday said it intends to appeal a court judgment to the UK Supreme Court.
The London-based merchant bank noted a publication of a judgment regarding the Hopcraft case, which upheld the claimant’s appeal against Close Brothers Ltd.
Close Brothers shares fell 9.7% to 331.00 pence each on late Friday morning in London.
‘Close Brothers disagrees with the court’s extension of the existing case law in this area and intends to appeal this decision to the UK Supreme Court,’ the company said.
The court has determined that motor dealers acting as credit brokers owe both a disinterested duty and a duty of loyalty to their customers.
‘This sets a higher bar for the disclosure of and consent to the existence, nature, and quantum of any commission paid than that required by current Financial Conduct Authority rules, or regulatory requirements in force at the time of the case in question,’ Close Brothers said.
It added: ‘We will be temporarily pausing the writing of new UK motor finance business while we review and implement any relevant changes to our documentation and processes to ensure compliance with these new requirements.’
The company noted that the judgment is likely to extend the current period of uncertainty, but added it is in a strong financial position with a CET1 capital ratio of 12.8% as at July 31.
Close Brothers said: ‘The financial impact of the Hopcraft case in isolation is not material to the group. However, subject to the appeal to the UK Supreme Court, the judgment may set a precedent for similar claims, which may (depending on the specific facts of those cases) result in significant liabilities for the group. The range of outcomes in these circumstances is currently uncertain, and the overall cost to the group will depend on, amongst other factors, the application of the court’s ruling, the number of claims received, the facts and circumstances of each individual claim, and the level of compensation, if any, granted by the court in each case. It is therefore currently not possible to assess the timing, scope or quantum of any potential financial impact on the group.’
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