April 24, 2024

How a UK Car Loan Probe Entangles Banks and the Wider Economy

Britain’s banks gave investors reasons to be optimistic in their earnings over the past few days. But one key unknown won’t go away anytime soon: the ultimate cost of potentially mis-sold car finance.

The Financial Conduct Authority’s review of commissions for car loans remains a major drag on domestic lenders’ valuations, according to UBS analyst Jason Napier. Uncertainty around the application of UK rules on this issue is one of the reasons that British banks trade at lower valuations than their peers in the euro area, Napier said in an interview.

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