(Reuters) -Secure Trust Bank said on Friday that it expects its annual profit to fall materially below market expectations as early arrears in its vehicle finance business have hit a three-year low, sending its shares to a record low.
A London court ruled in October that motor finance brokers must fully inform customers about commissions when taking out car loans, prompting lenders to temporarily pause writing new UK motor finance business loans.
“We are disappointed that it will take longer than expected to recover value from the excess level of defaulted Vehicle Finance balances, and the recent Court of Appeal decisions (on motor commissions) have added additional uncertainty on the benefits to be realised in 2024,” Secure Trust CEO David McCreadie said in a statement.
Shares of the Solihull, UK-based company fell 22.3% to 440 pence in early trading.
The Court of Appeal’s ruling came as Britain’s finance regulator considered a potential billion pound-plus consumer redress scheme following customer complaints about overcharging on commission when buying a car.
Secure Trust had paused new consumer lending in its motor arm in August following the recent Court of Appeal’s decision.
(Reporting by Yamini Kalia in Bengaluru; Editing by Subhranshu Sahu)
