Close Brothers appoints Mike Morgan as new chief during car finance crisis

In the United Kingdom, Adrian Sainsbury, former chief executive of motor finance company Close Brothers, stepped down on January 6, 2025, after an extended period of medical leave. He had been on leave since September 2024, and his resignation follows a challenging period that included significant industry turmoil related to car finance. Mike Morgan, who served as the finance director and acted as interim chief executive for several months, has been appointed to lead the organization permanently. Morgan's deep knowledge of the company is expected to ensure continuity in leadership during a critical period for the motor finance industry. The motor finance sector faces mounting pressure as it approaches a potential crisis over legal rulings related to commission payments to car dealers. A decision from the UK Supreme Court is anticipated that could uphold a previous Court of Appeal ruling, declaring it unlawful for dealers to earn commissions from lenders without the customer's informed consent. This ruling has the potential to unleash a wave of complaints from consumers who believe they may have been mis-sold car finance agreements. As a result, lenders like Close Brothers are bracing for significant compensation costs, estimated to reach around £30 billion. Close Brothers, like many other lending institutions, has set aside hundreds of millions of pounds to prepare for these liabilities. The Financial Conduct Authority (FCA) is also conducting an investigation into possible misconduct within the motor finance market. They have suggested that almost 99% of car finance agreements made between 2007 and 2021 included undisclosed commission payments to brokers, indicating widespread issues potentially affecting a large number of consumers. Mike Biggs, chairman of Close Brothers, praised Sainsbury for his leadership during a challenging period that included the impacts of the COVID-19 pandemic and geopolitical uncertainties. Biggs expressed confidence that Morgan's extensive experience will guide the company through this turbulent time and help in executing its ongoing strategies effectively as it faces unprecedented challenges.