Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Close Brothers has warned it will not pay a dividend this year and future payouts are under review as the UK lender braced for a possible hit from a regulatory probe into motor financing deals.
The Financial Conduct Authority last month said it would investigate commissions on car financing deals dating back a decade, saying the agreements gave lenders and dealers incentives to lift the interest rate levied on customers.
In a statement on Thursday, Close Brothers said there was “significant uncertainty about the outcome of the FCA’s review, and the timing, scope and quantum of any potential financial impact on the group cannot be reliably estimated at present”.
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Close Brothers is among the lenders exposed to potential historic mis-selling of motor finance deals, alongside Lloyds Bank that owns Black Horse, the UK’s largest car finance lender.
Shares in Close Brothers, which have fallen sharply since the FCA announced its probe, were down 11 per cent in early trading.
Given the need to plan for a range of outcomes, Close Brothers said it “will not pay any dividends on its ordinary shares for the current financial year, and the reinstatement of dividends in the 2025 financial year and beyond will be reviewed once the FCA has concluded its process”.
The FCA began its probe after a surge in customer claims on deals struck before 2021, when the regulator banned discretionary commission arrangements, where car dealers were able to set the interest rates in customer contracts.
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Analysts at Royal Bank of Canada estimate that Close Brothers will be hit with a £200mn redress bill. Lloyds has the largest exposure to the sector, with RBC estimating the high-street bank could suffer a £2bn hit.
Experts have said the FCA probe carried echoes of the payment protection insurance scandal. The PPI scandal dates back to the 1990s when banks mis-sold a type of insurance product to millions of customers. Banks were later hit with billions of pounds worth of fines and customer compensation claims.
The FCA first said it was investigating interest-linked deals offered by motor finance companies in January. It later clarified the scope of its probe that it said would look at deals dating back to 2007, leading analysts to revise their estimates for potential compensation.
Jefferies estimates the industry could face a total bill of £13bn, while RBC believes that figure could go up to £16bn.
Preparation is key to a retirement plan (Alamy/PA) (Alamy/PA)
Retirement is often associated with greater freedom and the opportunity to enjoy the rewards of decades of work. But for many people, the transition from earning a regular pay cheque to relying on pensions and savings can feel less like a gentle glide and more like standing at the edge of a financial cliff-edge.
A YouGov survey of 6,224 UK adults found that 55% reported that they were concerned about running out of money in retirement and, among these worried respondents, 63% were under 50 years old.
However, the good news is that avoiding a financial retirement cliff-edge isn’t about having extraordinary wealth – it’s about making informed decisions before and throughout retirement.
Susan Hope, retirement expert and business development director at Scottish Widows (Scottish Widows/PA)
We spoke to Susan Hope, retirement expert and business development director at Scottish Widows, who shared the following nine practical steps to help you build a retirement plan that can weather life’s uncertainties and give you greater confidence that your retirement years will be defined by peace of mind rather than financial stress.
1. Understand what state pension and credits you are entitled to
Coin on top of a state pension claim letter (Alamy/PA)
“Make sure the cornerstone of your financial retirement income is covered by the state and you’ve got everything you’re entitled to,” advises Hope. “If you go onto the HMRC app you can find out really quickly when your state pension age is and what you are due to get.
“Another important thing to look at on the app is a year-by-year breakdown of your national insurance contributions.”
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Hope recommends going back through your working years to make sure that you’ve got credits for every period because if you weren’t working due to unemployment, illness, or were caring for someone, you may be entitled to national insurance credits.
They help ensure you qualify for certain benefits, most notably the state pension, during periods when you weren’t working, were earning too little to pay National Insurance, or were claiming specific benefits.
2. Locate any lost or missing pension pots
Three glass jars of coins labelled pensions (Alamy/PA)
“I have a huge bee in my bonnet about the £31 billion of untraced pensions that we have in the UK,” says Hope. “Go back through your LinkedIn or your CV and make sure that none of that £31 billion is languishing somewhere, because that is your money to have.”
Once you know the name of your previous employer or your old pension provider, you can use the government’s free Pension Tracing Service to help find lost pension pots.
3. Look at the UK’s different retirement living standards
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“I think it’s really useful to look at the UK’s retirement living standards, because that will give you an idea of how much you’re going to need in retirement, depending on what type of retirement you want to live,” recommends Hope.
The three UK retirement living standards are minimum, moderate and comfortable.
“Ask yourself: What do I want my retirement to look like? I would compare the three standards to a Butlin’s, Barcelona or Barbados retirement,” says Hope.
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4. Maximise employer matching
(Alamy/PA)
“You are not going to outperform a double-matched employer contribution on your workplace pension. So, the earlier you start taking advantage of free money from your employer and the investment growth, the better,” says Hope.
“Get in early because that snowball effect of compound investment growth, compound interest, and the magic of the employer contribution are unrivalled.”
5. Review all your options
(Alamy/PA)
“Take a really holistic look at your finances,” advises Hope. “There definitely is a lever to pull thinking about equity release, but retirement is really complex, and there are so many choices.
“Looking holistically at your house, investments and pensions and being able to pull the levers to be both tax-efficient and make the most of your assets is hugely important.”
6. Use benefit and retirement calculators
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“Benefit calculators, such as the Turn2us benefit calculator, are really important,” says Hope. “There’s also a benefit calculator on Lloyd’s banking website that will help people understand if they’re entitled to specific benefits,” recommends Hope.
Scottish Widows also has a retirement calculator which in less than five minutes can help you understand the lifestyle you could have in retirement and will show you the estimated value of your retirement savings.
7. Use apps to get a financial overview
“I think that having an app for your finances is really important now,” says Hope. “I love having the single customer view, where you have your bank account alongside your retirement account and your pension.”
8. Make a before and after retirement budget
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(Alamy/PA)
Planning early and sticking to a budget prevents overspending.
“Before you retire, I would definitely do a before and after retirement budget, because some expenses will go down and some won’t,” says Hope.
9. Be clear on your priorities
Everyone will have different priorities in retirement.
“Ask yourself what is more important, is it stability of income, flexibility of income, or legacy for my family? When you can answer that question for yourself, that will then dictate how you manage your budgeting and your spending,” says Hope.
“Some people will want to drain the pot down, and some people will want to leave as much as possible, and some people will just want to really enjoy the longest holiday of their life.”
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Visit the Scottish Widows Retirement Calculator to see if your retirement plans are on track.
President Trump’s financial disclosure is raising many questions. For some, these include ethical concerns about whether he is profiting from the presidency. It’s also highlighting another mystery: how much is he paying in taxes? CBS News senior White House correspondent Weijia Jiang has more.
Regions Financial Corp. has completed its acquisition of Montgomery-based investment banking firm The Frazer Lanier Company, expanding its municipal finance and corporate investment banking services.
The Birmingham-based financial company announced Thursday that the acquisition has officially closed. Founded in 1976, Frazer Lanier provides investment banking services specializing in municipal and corporate securities and has served corporations, cities, counties and local boards throughout its history.
According to Regions, the acquisition is intended to strengthen the bank’s capital markets capabilities while enhancing services for public sector and institutional clients across its multi-state footprint.
Frazer Lanier has built its business by serving as an underwriter or placement agent for tax-exempt and taxable bonds, helping public entities and organizations access financing.
“Two of our top priorities at Regions Bank are strategically expanding our services and investing in top-tier banking talent,” John Turner, chairman, president and CEO of Regions Financial Corp., said in a news release. “By welcoming experienced bankers from Frazer Lanier to the Regions family, we are connecting Regions’ clients with even greater capabilities while advancing our long-term strategy for growth.”
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As part of the acquisition, Frazer Lanier will be integrated into Regions Bank’s Capital Markets division within the company’s Corporate Banking group.
Brian Willman, head of Corporate Banking for Regions, said the two organizations share a similar approach to serving clients.
“Frazer Lanier has built trust by staying close to clients and helping them navigate important decisions,” Willman said. “Together, we can expand that model by bringing more ideas, more capabilities and more connectivity to clients across our markets.”
Regions said the acquisition will expand its municipal finance and investment banking capabilities, strengthen its services for cities, counties and other public entities, and provide clients with broader access to financing and capital markets solutions.
Financial terms of the acquisition were not disclosed.
