Have you been declined car finance by Close Brothers Motor Finance

Alisa Dan

26 March 2025

Close Brothers Motor Finance is a significant player in the UK car finance market operating under the Close Brothers Group umbrella. Established in 2007, the company offers various vehicle financing options including Personal Contract Purchase (PCP), Hire Purchase, and other credit arrangements. They work with dealerships across the UK to help consumers finance vehicle purchases.

As a prime lender in automotive finance, Close Brothers serves customers with diverse credit histories. The company uses credit bureau data to assess applicants' creditworthiness before approving finance agreements. Their market position stems from specialized motor finance solutions designed for different customer needs.

In recent years, Close Brothers has faced increasing scrutiny regarding their historical sales practices and commission structures. The Financial Conduct Authority (FCA) has launched reviews into the car finance market, examining practices from before 2021 when discretionary commission arrangements were banned. This regulatory spotlight affects both the company and customers who signed finance agreements with them.

Recent Developments in Close Brothers Motor Finance

Close Brothers Motor Finance has weathered significant challenges since the Financial Conduct Authority announced its comprehensive review of the car finance market. This review specifically targeted sales practices following the 2021 ban on discretionary commission arrangements. Company shares dropped sharply after the FCA's announcement, creating uncertainty for investors and customers alike.

In early 2024, Close Brothers took the extraordinary step of temporarily suspending all new car finance business in the UK. This unprecedented decision directly resulted from the ongoing FCA investigation, highlighting the severity of the regulatory issues. By August 2024, the company began gradually resuming new UK motor finance business, suggesting some progress in addressing regulatory concerns.

Financial stability at Close Brothers has suffered, with the company canceling dividend payments to shareholders. This difficult choice underlines the serious challenges they face regarding potential compensation liabilities tied to past sales practices. The situation marks one of the most significant disruptions in the company's history since its founding.

Understanding Mis-Sold Car Finance Claims

Claims against Close Brothers Motor Finance center on undisclosed commissions allegedly added to customers' finance agreements. These claims focus on the period before the FCA's 2021 ban on discretionary commission arrangements. During this time, car dealers could potentially increase interest rates on finance agreements to earn larger commissions without properly informing customers.

The legal foundation for these claims comes from FCA findings about transparency failures in car finance agreements. Customers who signed finance contracts with Close Brothers may qualify for compensation if they weren't properly informed about commission arrangements affecting their finance costs. This lack of transparency potentially prevented customers from making fully informed decisions when buying vehicles.

Several common types of potential mis-selling have emerged in car finance agreements with Close Brothers and other lenders:

• Undisclosed commission arrangements between dealers and lenders
• Insufficient explanation of finance terms and conditions
• Misrepresentation of finance products and their suitability
• Pressure tactics used to encourage signing finance agreements
• Hidden fees or charges not properly disclosed during sales

These issues have prompted many customers to explore compensation options. Claims management companies and law firms now specialize in handling these cases, with some suggesting customers could receive refunds amounting to a significant portion of the commission paid. Claims typically must be filed within six years of the agreement date, though specific circumstances can affect this timeframe.

Claiming Against Close Brothers

Making a claim against Close Brothers Motor Finance starts with determining eligibility. Customers who entered finance agreements, especially PCP arrangements, before the 2021 discretionary commission ban may have valid claims. Several specialized claims firms have created streamlined processes to help consumers navigate this complex area.

Documentation is crucial to the claims process. Claimants typically need to provide their original finance agreement with Close Brothers, correspondence about the agreement, and information about the purchased vehicle. Some claims services help customers obtain these documents through free agreement-finding services if they no longer have their original paperwork.

The standard claim process against Close Brothers follows these defined stages:

1. Initial eligibility assessment to establish grounds for a claim
2. Collection and review of finance agreement documentation
3. Formal complaint submission to Close Brothers Motor Finance
4. Review and response from Close Brothers (typically within 8 weeks)
5. If needed, escalation to the Financial Ombudsman Service
6. Settlement negotiations or formal adjudication

Most claims services operate on a "no win, no fee" basis, charging a percentage of any awarded compensation. Compensation amounts vary considerably based on individual circumstances, but some customers report substantial refunds. Claims calculators estimate potential compensation based on total interest paid and finance agreement duration, with figures sometimes reaching £1,600 or more for longer-term agreements involving significant commission.

Impact on Close Brothers' Financial Health

The ongoing mis-sold car finance claims situation has significantly affected Close Brothers Group's financial stability. Their decision to suspend dividends in early 2024 represents a defensive move to maintain capital reserves against potential compensation payouts. This unusual step highlights the severity of their financial situation, as companies typically only suspend dividends in extraordinary circumstances.

Share prices have suffered considerably. Reports show a dramatic decline in Close Brothers' share value after the FCA announced its car finance market review. This market response reflects investor concerns about the potential scale of compensation that might be required for customers who entered finance agreements before 2021.

The long-term financial outlook for Close Brothers remains uncertain, with several key factors at play:

• Total number of eligible claims submitted
• Average compensation amount per successful claim
• Timeframe for processing and settling claims
• Regulatory decisions on industry-wide compensation frameworks
• Operational changes needed to meet new regulatory requirements

Despite these challenges, Close Brothers' recent resumption of new car finance business suggests some confidence in managing the situation. The company appears to be implementing operational changes to ensure compliance with current regulations, including technology upgrades to disclose commission arrangements promptly as required by regulators. These adaptations will be essential for sustainable recovery and future market position.

Related Articles and Resources

Extensive information exists about Close Brothers Motor Finance and the broader car finance industry issues. Financial publications like Motor Finance Online and Fleet News have covered the suspension and subsequent resumption of Close Brothers' new car finance business. These articles provide valuable context on how regulatory changes are reshaping practices across the sector.

Consumer-focused resources have emerged to help individuals understand their rights regarding potentially mis-sold car finance. Websites like CarFinance247 offer guides for consumers declined by Close Brothers, while claims management firms provide detailed explanations of eligibility criteria and claims processes. The growing volume of these resources reflects increasing consumer awareness of the issue.

Key resources available for consumers seeking information include:

• Financial Conduct Authority regulatory updates on car finance
• Consumer guides explaining finance terms and potential mis-selling
• Claims eligibility checkers and compensation calculators
• Forums where consumers share experiences
• Legal information about consumer rights for financial services

These resources vary in approach and perspective, with some focusing on consumer protection while others examine the business implications for lenders like Close Brothers. The diversity of available information helps consumers develop a comprehensive understanding of the situation, though careful evaluation of sources remains important given the commercial interests of some information providers.

Community Discussions and Insights

Online forums and consumer groups have become valuable sources of firsthand experiences with Close Brothers Motor Finance. Sites like Consumer Action Group and MoneySavingExpert host extensive discussions where customers share their experiences, challenges, and outcomes. These community conversations provide insights beyond official statements or marketing materials.

Common themes in these discussions include communication difficulties when resolving issues with Close Brothers, experiences with the claims process, and varying outcomes for different customers. Some forum threads detail specific challenges such as handling defaults, returning vehicles, or exiting agreements early. These real-world experiences complement formal information sources by highlighting practical issues consumers face.

Consumer sentiment in these forums appears mixed, with various experiences reported:

• Some users describe satisfactory claim resolutions and responsive customer service
• Others express frustration with slow response times and bureaucratic processes
• Technical discussions about finance agreement terms appear frequently
• Members share negotiation approaches and outcomes
• Experienced forum members offer advice about documentation and evidence

While valuable, these community insights should be considered alongside official information. Individual experiences vary significantly based on specific circumstances, timing, and the nature of agreements involved. Nevertheless, these discussions provide an important perspective on how Close Brothers' policies affect real customers, contributing to a more complete understanding of their operations and customer relations.

Conclusion and Future Outlook

The situation surrounding Close Brothers Motor Finance reflects broader shifts in the UK car finance industry, with significant implications for lenders, dealers, and consumers. The regulatory landscape has clearly moved toward greater transparency and consumer protection, with the FCA taking an increasingly active role in examining historical sales practices. This shift fundamentally changes how car finance will be sold and managed going forward.

For Close Brothers specifically, navigating these challenges requires substantial adaptation. Their decision to resume writing new business shows commitment to remaining in the market, but likely with modified practices ensuring full compliance with current regulatory standards. Technology upgrades for improved commission disclosure demonstrate a more transparent approach to customer interactions.

Several key factors will shape the long-term outlook:

• Resolution of historical claims from before 2021
• Implementation of enhanced transparency measures in new agreements
• Potential industry-wide standardization of commission disclosure
• Increased consumer awareness of finance agreement terms
• Recovery of market confidence after regulatory issues are resolved

For consumers with existing Close Brothers finance agreements or those considering new ones, staying informed about these developments remains important. The increased availability of information and support services represents a positive development for consumer empowerment, potentially creating more balanced relationships between finance providers and customers. As the situation evolves, both Close Brothers and the wider car finance industry will likely emerge with significantly transformed practices.