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Motor finance provider Close Brothers has scrapped its dividend for shareholders as it awaits the outcome of the Financial Conduct Authority review into historic motor finance commission arrangements. Its share price fell 16% on the day.
In a statement it said: “There is significant uncertainty about the outcome of the FCA’s review, and the timing, scope and quantum of any potential financial impact on the group cannot be reliably estimated at present.
“In accordance with the relevant accounting standards, the Board has concluded that it is currently not required or appropriate to recognise a provision in the group’s Half-Year 2024 results in relation to this matter.
Close Brothers said its business continues to perform well and it was confident in its strength.
“While there is no certainty regarding any potential financial impact as a result of the FCA’s review, the Board recognises the need to plan for a range of possible outcomes.
“It is a long-standing priority of the group to maintain a strong balance sheet and prudent approach to managing its financial resources.
“To that end, the Board considers it prudent for the group to further build capital strength, while supporting our customers and business franchise.
“Therefore, the group will not pay any dividends on its ordinary shares for the current financial year, and the reinstatement of dividends in the 2025 financial year and beyond will be reviewed once the FCA has concluded its process and any financial consequences for the group have been assessed.”
Close Brothers said it was “implementing a range of actions to further accrete capital.” It will give an update on proceedings at its half year 2024 results.