The Financial Conduct Authority (FCA) has recently issued a cautionary statement advising companies with potential exposure to car finance commission claims to ensure they have sufficient funds to cover any potential penalties. This warning comes in response to a progress report indicating that some companies have been struggling to provide the regulator with relevant data on commissions. The reasons for this difficulty range from issues with data storage and outdated systems to the absence of any record of commissions.
In response to this development, Barclays (BARC) has sought a judicial review into a decision made by the Financial Ombudsman Service related to commissions. This move has prompted a sharp decline in the share prices of specialist finance firms, particularly Close Brothers (CBG), which has experienced a 39% drop since the beginning of the year. The FCA is set to reveal their next course of action on 24th September, and they have the option to extend the review and complaint pause that is currently in place.
In the energy sector, Petrofac (PFC) has raised concerns by indicating that its current discussions with lenders to restructure its debts may result in a significant portion of the debt being converted into equity in the business. The company, faced with mounting debts of nearly $600 million as of last year, is also considering asset sales to offset its financial obligations. With the announcement of these developments, Petrofac’s shares plummeted by 26%, marking a 60% decline over the past 12 months.
Meanwhile, Premier Miton (PMI), a fund manager, has managed to weather the storm of net outflows for another quarter. Despite experiencing outflows amounting to £268 million for the second quarter, the company’s total assets under management (AUM) saw a 9% increase, totaling £10.7 billion. This growth can be attributed to the acquisition of Tellworth Investments, which added £560 million in assets to Premier Miton’s portfolio. Commenting on this positive performance, CEO Mike O’Shea expressed optimism about the company’s future, citing potential benefits from an improving environment for fund flows and asset values, particularly with the likelihood of lower interest rates anticipated through 2024.
These developments in the financial sector bring both challenges and opportunities for the companies involved. It will be interesting to see how these entities navigate the intricacies of the financial landscape in the coming months.