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Shares in Close Brothers Group PLC plummeted on Monday after short seller Viceroy Research said it has ‘systematically misrepresented’ its exposure to the Financial Conduct Authority’s forthcoming motor finance consumer redress scheme. Shares in the London-based merchant bank closed down 14% at 357.60 pence each in London on Monday. In a report, Viceroy Research, which is short Close Brothers, said its review of the FCA‘s consultation paper, court transcripts, and independent claims suggests that Close Brothers will have to ‘at least’ double its existing provisions. Last October, Close Brothers nearly doubled its provision for motor finance compensation to £300 million from £165 million. The FCA is expected to publish the final rules on a compensation scheme for motor finance customers later this month which could see millions of motorists receiving payments in the coming year for mis-selling. Viceroy’s said its analysis of FCA consultation paper CP25/27 and Supreme Court case law indicates that Close Brothers’ redress exposure ranges from £572 million to £1.07 billion, well above its current provision. ‘At these levels, the group’s CET1 ratio will approach regulatory breach thresholds,’ the Viceroy report said, noting Close Brothers has exhausted all available measures to sustain its capital base. Viceroy said Close Brothers hasn’t ‘fully provisioned’ for the redress because ‘further provisions will breach CET1 regulatory capital restrictions and can create an equity wipeout event.’ Any further provisions risk pushing the firm below its minimum capital requirements, triggering: the suspension of additional tier coupons and possible write-down of the assets; credit rating downgrades to junk; and regulatory intervention for restructure, the report added. Close Brothers is due to report half-year results on Tuesday. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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