The motor finance mis-selling scandal continues to haunt the UK auto lending market.
The latest version of the FCA’s redress scheme has put Blue Motor Finance is in a precarious position. Tom Hall has covered the details here, including what it means for the ABS market.
The immediate answer is not very much. Blue only has one outstanding deal and even that has almost fully amortised.
The primary market is back up to full speed. Some lenders are only securitizing loans outside the FCA scheme, as many of the affected loans have already been paid down significantly. Other issuers have careful provisions and sufficient equity to shield investors.
Indeed, investors have been happy to buy and there could be more issuance on the way.
Orbita Funding 2026-1 has been registered at Companies House, suggesting a possible return to market for Close Brothers, a lender affected by the FCA scheme. Close Brothers did not respond to a request for comment.
But in the longer term, consolidation of the sector is possible. For some, the scheme makes it less attractive to own UK lenders. Previous Another Fine Mezz columns have covered First Rand’s decision to put Aldermore Bank on the market.
In addition, several banks have responded to the collapse of bridging lender Market Financial Solutions by tightening their lending to specialist lenders, particularly to smaller businesses without institutional backing.
More cautious senior lenders and less enthusiastic equity participation points to opportunities for larger lenders to consolidate the sector.
For deals to get done buyers and sellers will have to agree on price. As GlobalCapital has reported, that has been a challenge to selling specialist lenders in recent years, though clarity on the extent of the FCA’s redress scheme should help matters.
