FirstRand Ltd. plans to exit its UK motor-finance business after increasing its provision to cover compensation for clients to £750 million (approximately R18.3 billion), the South African lender announced on Tuesday.
The company has raised the amount by £510 million (approximately R12.4 billion) following the publication of the UK Financial Conduct Authority’s final redress plan for the missold car loan saga at the end of March. According to Bloomberg News , the original source of this report, the UK motor-finance industry collectively faces a bill of approximately £9.1 billion (approximately R222 billion) to compensate consumers, with 12.1 million loans deemed eligible for redress.
Given the watchdog’s decision, FirstRand stated that the business case for a UK consumer-finance entity is “not within” its risk appetite. The lender will work towards “an orderly ownership transition” from Aldermore Group, the UK motor-finance business it acquired in 2017. FirstRand reiterated its view that the FCA’s plan “significantly and inappropriately diverges” from last year’s UK Supreme Court ruling and confirmed that it reserves its legal rights.
The case centres around discretionary commission arrangements that allowed car dealers to earn thousands of pounds for themselves while enabling banks to push up interest rates on consumer loans. After the UK Supreme Court examined issues with disclosures on these payments, it ruled in August 2025 that banks should only pay compensation where the most serious cases of abuse were found. The company’s provision is almost three times larger than the £275 million (approximately R6.7 billion) of profit the group extracted from motor-finance activities over more than a decade of lending in the UK.
The FCA’s final review, published in late March, estimated average redress per loan agreement at £829 (approximately R20,200). For its analysis, the regulator reviewed 32.5 million motor-finance agreements that consumers entered into between April 2007 and October 2024, estimating that 14.2 million of those, or 44%, would be considered unfair. The total compensation bill was subsequently reduced to £7.5 billion (approximately R183 billion) from an earlier estimate of £8.2 billion (approximately R200 billion).
FirstRand can trace its involvement in the UK motor-finance industry back to 2006, when it acquired what is now known as its MotoNovo Finance business from Julian Hodge Bank. The company currently commands approximately 10% market share in UK car finance. According to Close Brothers Group PLC regulatory filing , the broader industry has been grappling with the fallout from the commission scandal for more than two years, with major lenders including Lloyds Banking Group Plc and Close Brothers Group Plc setting aside billions of pounds to pay affected customers. Close Brothers stated that the FCA’s final proposals remained overly strict and failed to take proper account of the Supreme Court’s ruling.
FirstRand’s overall business in the UK comprises approximately 10% of its company-wide earnings and represents about 20% of its balance sheet, the lender has previously disclosed. Following the increased motor provision, FirstRand now expects its full-year normalised earnings to contract by as much as 9%, the company said in a separate statement. Return on equity will be at or just below the bottom end of its stated target range of between 18% and 22%.
The shares rose as much as 2.3% following the announcement and had gained 0.6% to 87.18 rand by 4:25 p.m. in Johannesburg, suggesting that investors had anticipated a more severe outcome or viewed the exit from the UK market as a decisive strategic move. FirstRand had originally set aside £127.4 million (approximately R3.1 billion) in provision linked to UK car loans last year, adding a further £115.1 million (approximately R2.8 billion) in September 2025 before the latest £510 million (approximately R12.4 billion) increase triggered by the FCA’s final redress plan.