Rethink on car finance

FIRSTRAND: SET TO WEIGH R3.3BN PROVISION

- Liesl Peyper

SE-listed banking giant FirstRand says it may need to revise the initial R3.3 billion provision set aside for UK motor finance litigation following a ruling by the UK Supreme Court last Friday.

The court ordered the bank to repay commission plus interest to one of the claimants in a high-profile case concerning vehicle financing practices in the country.

While the court ruled in favour of FirstRand in several key respects, including fiduciary duties, it found that the relationship between the bank and one claimant, a Mr Johnson, was unfair under the UK's Consumer Credit Act.

FirstRand's share price jumped more than 3% on Monday, following the judgment and clarification of the legal position. The group noted that the Supreme Court ruling brought much-needed legal clarity and closed off concerns that could have had a far-reaching impact on the broader UK motor finance industry.

Investec, which is also affected by the probe, indicated it had made a R684 million provision for possible compensation in the vehicle finance probe.