Close Brothers Finance: £122.4m Loss and Motor Finance Redress

Close Brothers finance loss: the short answer

Close Brothers Group’s 2025 annual report records a statutory operating loss before tax of £122.4 million from continuing operations for the year ended 31 July 2025, compared with a £132.7 million profit in 2024.

The annual report attributes most of the loss to motor finance-related adjusting items. It also reports adjusted operating profit from continuing operations of £144.3 million, down from £167.6 million.

That is the central point for investors: the underlying business remained profitable on an adjusted basis, but the motor finance costs were large enough to push the statutory result into a loss.

What caused the motor finance provisions?

The annual report breaks out a £165.0 million provision for motor finance commissions, alongside £18.7 million of complaints-handling, operational and legal costs. Close Brothers also booked a separate £33.0 million provision for historical deficiencies in early settlement processes within Motor Finance.

For investors, the important issue is not just the size of those charges. It is whether further redress, administration or legal costs could materially change the eventual bill.

What has changed with the FCA redress scheme?

The original framing that the FCA scheme was still being consulted on is out of date. In PS26/3, published in March 2026, the FCA introduced a motor finance consumer redress scheme covering customers treated unfairly between 2007 and 2024.

The FCA says the scheme is intended to compensate eligible customers where commission arrangements were not properly disclosed. However, the Close Brothers Motor Finance customer site says the scheme has been legally challenged and partly suspended, delaying potential compensation.

The practical position is therefore clearer than it was when the annual results were published, but it is not fully settled. Investors still need to follow the legal process, implementation timetable and any effect on Close Brothers’ estimates.

Is Close Brothers Finance only a motor lender?

No. The Close Brothers annual report describes a UK specialist banking group whose Banking division includes Commercial, Retail and Property lending. Retail includes finance distributed through motor dealers, motor finance brokers and insurance brokers, while Commercial includes Asset Finance and Invoice and Speciality Finance.

The Close Brothers Motor Finance customer site says that business provides finance for cars, motorcycles and vans in the UK.

This distinction matters. The motor finance provision is a major group issue, but it is not a description of the entire lending business.

Related reading: how Close Brothers finance supported a battery recycling plant.

How should investors read the results?

The statutory loss and adjusted profit answer different questions. The adjusted figure helps show how the continuing business performed before the relevant adjusting items, while the statutory figure captures the financial effect of those items.

It would be a mistake to ignore either number. Adjusted profitability does not make the provisions disappear, but the statutory loss does not mean every part of Close Brothers is loss-making.

The investment case therefore comes down to three broad questions:

• Whether the final motor finance cost stays within a manageable range.
• Whether management can protect capital while continuing to lend selectively.
• Whether the underlying bank can convert adjusted profitability into sustainable statutory returns once the exceptional costs reduce.

What to watch next

• Developments in the legal challenge and the FCA’s implementation timetable.
• Any change to Close Brothers’ estimate of motor finance redress and associated handling costs.
• Capital strength and the timing of any return to shareholder distributions.
• Loan-book quality, margins and cost control across the broader Banking division.
• Evidence that the group can grow without weakening lending standards.

Customers looking for agreement-specific information should use the official Close Brothers Motor Finance customer website rather than relying on an investment article.

Josh’s take

This remains a difficult investment to judge from the headline loss alone. The adjusted result suggests there is still a viable specialist banking business underneath the provisions, but that does not remove the capital and valuation risk attached to motor finance redress.

The sensible approach is to avoid pretending the final cost is known. If the redress process becomes predictable and the underlying bank continues to perform, the shares may become easier to value. If costs keep moving or implementation drags on, the uncertainty will remain the dominant part of the story.