- Secure Trust Bank
- 20 October 2025 07:52:16
Source: Sharecast
The bank now expects it will need a total of about £21m to compensate customers for motor finance mis-selling. This comprises £16m in redress and £5m in costs and STB said that if the FCA scheme was implemented entirely in its current form, it would expect to increase the provision for redress by a further £6m.
The additional expected provision of £16m will reduce the CET1 ratio by around 50 basis points to 12.8%, it said, significantly above its regulatory requirement of 9.6%.
"STB has been capital accretive through the year and expects to continue to be capital accretive in Q4 2025, on an underlying basis," it said.
"STB remains committed to ensuring customers receive appropriate redress where there has been customer harm," the company said.
"However, it considers that the FCA's proposed approach to assessing unfairness is not aligned with the Supreme Court judgment in Johnson v FirstRand, where the test for unfairness is highly fact specific and must take into account all relevant factors."
STB pointed out that it did not have commercial ties in the form of contractual rights of exclusivity or first refusal to provide vehicle finance.
"STB made limited use of discretionary commission arrangements (DCAs) and, where it did so, believes that it did so as a means of reducing its rates in competition with other lenders to provide its customers with competitive finance, and not to harm them," it said.
The bank noted that it stopped using DCAs in June 2017, well ahead of their ban in 2021.
"STB will continue to engage constructively with the FCA and others on these and additional points," it added.
"As there remains uncertainty on the final rules of the redress scheme, the ultimate cost to STB could vary from its estimated provision."
