Close Brothers will cut around 600 jobs—nearly a quarter of its workforce—as the UK banking group moves to contain costs while facing a compensation bill of about £300 million linked to the motor finance scandal.
The lender said the reductions will be carried out over the next 18 months across its UK and Ireland operations, as part of a broader restructuring aimed at improving efficiency and financial resilience. The move comes as the company continues to grapple with mounting regulatory and legal costs tied to mis-sold car loans.
The cuts form part of an accelerated cost-saving plan, with Close Brothers targeting £25 million in savings in the current financial year, rising to £60 million in the following year—earlier than previously planned. According to PA Media, the strategy includes outsourcing and offshoring roles, reducing its office footprint and increasing the use of artificial intelligence to streamline operations.
The announcement coincided with the group reporting pre-tax operating losses of £65.5 million for the six months to March 31, after setting aside an additional £135 million for compensation claims. While losses narrowed from £102.2 million a year earlier, the provisions highlight the ongoing financial strain of the scandal.
At the centre of the issue is the Financial Conduct Authority’s (FCA) proposed redress scheme for motorists who were sold car loans with undisclosed or unfair commission structures. The regulator is expected to finalise the scheme later this month, though several lenders, including Close Brothers, have challenged the methodology used to calculate consumer losses.
The bank’s total provision for the scandal has now reached roughly £300 million, nearly double earlier estimates after an additional allocation made last October. The scale of the liability has intensified scrutiny from investors and analysts, particularly as uncertainty remains over the final compensation framework.
Market confidence has already been shaken. Shares in Close Brothers fell sharply after short seller Viceroy Research claimed the bank may have underestimated its exposure and could be forced to significantly increase provisions. The company rejected the claims, stating it “strongly disagrees” with the report.
Chief executive Mike Morgan said the restructuring decisions, while difficult, were necessary to “structurally lower our cost base” and improve agility. The group has also taken steps to strengthen its balance sheet, including agreeing to sell parts of its business such as the Winterflood division and its asset management arm.
The developments reflect a broader reckoning within the UK banking sector, as lenders confront regulatory action over historical sales practices while attempting to modernise operations through automation and cost discipline.
Looking ahead, Close Brothers faces a delicate balancing act: managing regulatory liabilities, restoring investor confidence and reshaping its workforce for a more technology-driven operating model. The outcome of the FCA’s final ruling is likely to determine how deep the financial and organisational impact ultimately runs.