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Banks were rocked by the Payment Protection Insurance (PPI) scandal in the early 2000s, and another crisis appears to be looming on the horizon.
The Financial Conduct Authority (FCA) launched an investigation in January into the possible mis-selling of car loans between 2007 and 2021.
The watchdog’s investigation has sent shockwaves through the City, with almost £700m wiped from the value of commercial bank Close Brothers in a single session last month.
Yesterday it was Vanquis Banking that was left reeling.
Vanquis said that while it is not part of the Financial Conduct Authority’s investigations into car finance, it has seen “significant levels of third-party complaint submissions”.
Investigation: The Financial Conduct Authority launched an investigation in January into the possible mis-selling of car loans between 2007 and 2021.
It warned that although the “vast majority” of complaints are not substantiated, the increased costs of reviewing them will “materially” affect profits.
In January, the UK’s financial services watchdog said it was investigating whether compensation could be paid to people who may have been overcharged for car loans.
If misconduct is found, those affected will be compensated.
Vanquis said it was exploring proactive legal measures to address this situation.
MoneySavingExpert.com, the platform of consumer rights campaigner Martin Lewis, said more than 1 million complaints have been filed using a tool it launched on February 6 – an average of 30,000 a day.
The group warned that its profits for this year will be well below the £75m expected by analysts.
The shares plunged 50 per cent, or 62.1p, to 62.1p, reducing the value of the business by almost £160m. Meanwhile, Close Brothers fell 2.5 per cent, or 9.4p, to 373.6p.
Stock Market Watch – Ramsdens Holdings
Ramsdens shares shined after cashing in on customers rushing to sell their gold jewelery as prices hit an all-time high.
The Middlesborough-based pawnbroker’s profits from its precious metals division rose 20 per cent in the five months to the end of February.
The business has been supported by a “relatively high gold price”, which last week reached $2,185 an ounce.
The shares rose 5.6 per cent, or 10p, to 190p.
The FTSE 100 rose 0.1 per cent, or 9.49 points, to 7,669.23 and the FTSE 250 fell 0.4 per cent, or 71.69 points, to 19,530.09.
National Grid has sold another part of the business and plans to use some of the proceeds worth £700m to pay down its debt.
A consortium of long-term investors led by Macquarie Asset Management, which already owned 60 per cent of the company, bought another 20 per cent stake.
The rest is still controlled by National Grid, which rose 0.1 per cent, or 1.5p, to 1,054.5p.
Iron ore miner Ferrexpo collapsed after the accounts of one of its companies were frozen following a court order.
Ukrainian police began investigating that division in November 2022 following accusations of illegal debris removal.
Shares fell 26.8p, or 18.8p, to 51.4p.
Weak iron ore prices weighed on other miners.
Rio Tinto fell 1.2 per cent, or 60 pence, to 4,809.5 pence and Glencore lost 0.6 per cent, or 2.35 pence, to 398.4 pence.
Anglo American fell in early trading but managed to rise 0.01 per cent, or 0.2 pence, to 1,850.8 pence at the close.
Meanwhile, Darktrace shares rose after a broker upgrade.
The cybersecurity company last week raised its forecasts for this year and said it will intensify its efforts to combat the threats posed by artificial intelligence (AI).
The shares soared 15.6 per cent, or 58.8 pence, to 436.2 pence.