Motonovo hikes motor finance provision as buyers circle Aldermore
Car finance firm Motonovo has ramped up its provisions for the motor finance scandal as top banks and private equity firms explore a takeover of its parent company Aldermore.
The Cardiff-headquartered company recognised a £153.2m charge in its latest accounts for historical motor finance commissions. This was more than double the £60.6m recorded last year.
The provision was split between £147.8m for customer redress and £5.4m in operational costs related to legal fees, complaint handling and scheme preparation.
Pressures from the increased provision drove the firm to a loss of £151.6m for the financial year ending June 2026. This was more than six-times higher than the £24.6m loss recorded in the previous year.
South African financial services group Firstrand confirmed it was putting Motonovo’s direct owner Aldermore on the sales block in April following frustrations with the City watchdog’s car finance redress scheme.
Motonovo warns Supreme Court car finance ruling not a broad precedent
The Financial Conduct Authority’s £9.1bn scheme followed years of legal drama in the sector leading to a battle at the Supreme Court.
The top Court partially overturned a landmark ruling on car finance deals, rejecting claims that hidden commissions were automatically unlawful. But it found one customer’s undisclosed commission created an “unfair relationship”, leaving the door open for an industry-wide redress scheme.
Firstrand, which fought in the Supreme Court alongside FTSE 250 lender Close Brothers, called the redress scheme “disproportionate and unfair”.
Motonovo said in its accounts that the unfairness finding by the court does not create a “broadly applicable precedent for other courts to follow”.
Despite the motor finance tensions, the sale of Aldermore has attracted a number of top financial firms.
City AM revealed Nationwide and Investec were weighing a bid for the specialist bank. They join the likes of Lloyds and private equity firm Warburg Pincus.
Motonovo’s net loans grew 10 per cent to £4.5bn in the last year, whilst new lending jumped by a fifth to £2.4bn.
But operating income slid nine per cent to £155.5m largely thanks to a contraction in its net interest margin.
The margin – a key indicator of a bank’s profitability from lending – reduced to 3.55 per cent from 4.29 per cent.