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Close Brothers shares surge after UK bank says it can ‘comfortably absorb’ cost of car finance compensation

about 5 hours ago
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Close Brothers shares surged on Wednesday after the UK bank declared it could “comfortably absorb” its slice of a £9.1bn compensation bill over the motor finance scandal, hours after one of its rivals announced it was selling its UK operations over looming costs.The specialist lender said it expected the final terms of the Financial Conduct Authority’s (FCA) compensation scheme to cost roughly £320m, a sum that was “broadly similar” to previous estimates and the £294m put aside to date.Close Brothers said the extra £26m could be “comfortably absorbed by existing capital resources, leaving the group well positioned to continue delivering its strategy”.The news sent its shares up by 17% by early afternoon on Wednesday.

The FCA’s compensation scheme, which was finalised last week, is intended to draw a line under the car finance scandal, in which drivers were overcharged for loans as a result of commission payments between lenders and car dealers.It estimated that victims will be in line for payouts worth £830 on average.The bank’s market update allayed fears about whether it could survive the scandal, especially after the short seller Viceroy Research claimed last month that Close Brothers would have to at least double its provision for car finance to somewhere between £572m and £1.07bn.Close Brothers has already sold its broker and asset management businesses in order to shore up its balance sheet, and it is on track to cut 600 staff – about a quarter of its workforce – to reduce costs.

Close Brothers’ update came hours after its rival, the South African group FirstRand, announced it would be selling its UK operations – trading as Aldermore and motor lender MotoNovo – amid frustration over the FCA compensation scheme, which it said was “deeply flawed”,The group said it would be forced to raise an extra £510m to cover compensation costs – taking its total provisions for the motor finance scandal to £750m – slash its earnings forecast and offload its UK business,FirstRand said in a trading statement: “The group has consistently shared with all UK regulators its concerns that should the redress scheme result in the level of provisioning that has now transpired, it would be forced to consider whether it can continue to participate in motor finance lending in the UK market on a sustainable basis,”It said that while “the group has done everything in its power to protect shareholders from a redress scheme that it considers deeply flawed,” it would now be looking to “facilitate an orderly ownership transition” of its Aldermore business,A spokesperson for Aldermore, which employs 1,500 staff across offices in London, Reading, Manchester and Cardiff, did not respond to questions over whether the business could end up being wound down if it failed to find a buyer.

“The Aldermore Group is a financially robust business that continues to deliver sustainable growth,” the spokesperson said.“We remain operating in our markets as usual, driving significant positive outcomes for our customers.”
societySee all
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Treat jailed drug dealers like radical extremists, says prisons watchdog

Jailed criminals who are flooding prisons with drugs should be isolated like radical extremists and “assertively managed”, the England and Wales prisons watchdog has said.Charlie Taylor, HM inspector of prisons, said major dealers were living “consequence-free” in jail when they should be separated from the majority of inmates, subjected to regular searches for phones, and punished and rewarded according to their behaviour.Taylor’s demands for a radical rethink follow concerns from MPs about how to break a cycle of violence and chaos caused by the large-scale importation of drugs into “long-term high-risk” prisons, which hold England and Wales’s most dangerous inmates.In an interview with the Guardian, Taylor said: “Some serious organised crime gang members are coming into prison and their feet just don’t touch the ground.“They’re running operations and making a lot of money almost from the moment they get into the jail

about 13 hours ago
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‘People are so judgmental’: the growing cohort of over-55s facing homelessness

Richard Hewett, who was forced to sleep in his car when his relationship broke down, is one of many in the UK hit by rising costs and a lack of social housingWhen Richard Hewett’s relationship broke down, he was forced to leave his partner’s council house – but found his disability benefits didn’t stretch far enough to get him his own flat in his Essex home town. He resorted to the next best option: sleeping in his car.It wasn’t what he had expected, aged 59. At 6ft 2in, he squeezed into a Ford Focus and struggled to sleep. When he broke his ankle, he couldn’t look after it properly, contracted sepsis and had his leg amputated

about 14 hours ago
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World held hostage by reliance on fossil fuels, Christiana Figueres warns – and climate health impacts are ‘mother of all injustices’

Countries are being “held hostage” by their reliance on fossil fuels, a former UN climate chief has warned, describing the health impacts of climate change as “the mother of all injustices”.Christiana Figueres, an international climate negotiator who helped deliver the Paris agreement signed in 2016, made the comments as she was announced on Wednesday as co-chair of a Lancet Commission examining how sea-level rise is reshaping health, wellbeing and inequality.Lancet Commissions are international collaborations that analyse major global health issues and influence policy. This commission will examine legal frameworks to hold countries accountable for the health harms of sea-level rise. It will report by September 2027

about 19 hours ago
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What are the health impacts of sea-level rise, and who should pay?

In November in Solomon Islands, the former Tongan health minister Dr Saia Ma’u Piukala stood outside the main hospital in Honiara and “watched seawater lapping at its outer walls”.“The facility is now under threat, with plans under way to relocate it to higher ground – a massive and costly undertaking,” Saia, a surgeon and now the World Health Organization’s regional director for the western Pacific, tells the Guardian.“It should never have come to this.”The impact on patients and health services is just one part of a growing health burden driven by sea-level rise, including water contamination, infectious disease, food insecurity, displacement and worsening mental health.In 2024, at the inaugural UN general assembly meeting on sea-level rise, representatives of small island developing states and low-lying countries described the issue as a global crisis threatening 1 billion people worldwide, urging governments globally to act to protect their health and lives

about 19 hours ago
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Charity cleared after false claims online over migrant welcome project

A refugee charity subjected to vicious social media attacks over a migrant welcome project in schools has been cleared of wrongdoing after watchdogs found allegations it encouraged pupils to send Valentine’s Day cards to asylum seekers were misleading and false.City of Sanctuary UK came under fire last year after rumours spread online that under its schools programme, children were being “forced” to write heart-shaped welcome cards to adult migrants, including cards addressed to “my fiance”.The Tory MP Gavin Williamson made a formal complaint against City of Sanctuary last August in the wake of the online attacks, claiming the charity had acted inappropriately and breached the law by acting in a “highly politicised” manner.However, in a finding published on Tuesday, the regulator rejected Williamson’s complaint and said the charity had been the victim of a baseless misinformation campaign that resulted in its staff and trustees receiving threats.Helen Earner, the director of regulatory services at the Charity Commission, said: “In this case, concerns about the charity’s work were fuelled by online misinformation, something charities are increasingly subject to and a concern for us as regulator

1 day ago
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Judith Rapoport obituary

The child psychiatrist Judith Rapoport, who has died aged 92, is credited with bringing obsessive-compulsive disorder (OCD) to public awareness. Her book The Boy Who Couldn’t Stop Washing (1989), which was translated into more than 20 languages and written in jargon-free style for a non-medical readership, was based on her groundbreaking research into the condition.People with OCD can feel their lives are upended by the feeling that they must constantly retie shoelaces, check light switches are turned off or doors are locked. Others describe the “torture” of having to perform rituals before leaving home or having to constantly wash their hands.Until the book was published, most people with OCD were unaware that others suffered similarly, and many were so embarrassed by their behaviour that they hid it from family and friends

1 day ago
foodSee all
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Can’t face another mouthful of chicken? You’re probably coming down with the ick

2 days ago
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Georgina Hayden’s quick and easy recipe for gochujang butter salmon | Quick and easy

2 days ago
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How to make the perfect Portuguese feijoada – recipe | Felicity Cloake's How to make the perfect

3 days ago
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Burro, WC2: ‘Big but the opposite of brash – restaurant review | Grace Dent on restaurants

4 days ago
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Sunday best: Thomasina Miers’ recipes for aromatic chicken one-pot and salted caramel banana cake

4 days ago
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Oats, sardines and crisps: emergency foods to stockpile – and why you should share them

4 days ago