<div id="readability-page-1"> <time datetime="2026-03-18T01:37:00+00:00"> Wednesday 18 March 2026 1:37 am </time> | Updated: <time datetime="2026-03-18T08:43:08+00:00"> Wednesday 18 March 2026 8:43 am </time> <div> Add as a preferred source on Google </div> <figure> <div> </div> <img width="742" height="495" src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2026/03/carfinancesamcolumn.jpeg/query-dz03NDI?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2026/03/carfinancesamcolumn.jpeg/query-dz03NDI"/> </figure> In the fallout of the multi-billion pound motor finance scandal, bank bosses are getting their house in order. The landmark saga, which began with the UK’s financial watchdog’s review into the market over two years ago, centres around the use of ‘secret’ agreements between car dealers and lenders that left customers in the dark on how much commission salesmen were pocketing.As provisions for potentially staggering payouts grew, a number of banks with exposure to the motor market have turned inwards and embarked on drastic cost-cutting regimes.So is the new-found prudence a direct result of the fall out from the car finance scandal? Banking chiefs wouldn’t say so.Indeed, Mike Morgan, who took the helm at Close Brothers in January 2025, told City AM following the bank’s financial results on Tuesday his aggressive cost-cutting agenda – targeting savings of £25m for this year – is “entirely separate” from the motor finance debacle.The bank has amassed £300m in provisions for potential payouts for the watchdog’s industry-wide redress scheme and recorded a loss of £65.5m for the first half of the financial year after topping up its provisions in October.<figure><img height="640" width="960" src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2025/08/closebrothers-1.jpeg/query-dz05NjA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2025/08/closebrothers-1.jpeg/query-dz05NjA"/><figcaption>Close Brothers provided a market update on Tuesday.</figcaption></figure>The update on the firm’s bottom line came alongside plans to axe 600 full-time roles at the bank, making up a whopping 20 per cent of the group’s workforce. Though, the announcement failed to provide the uplift to the bank’s stock that Lloyds were treated to last September after reports emerged of plans to axe five per cent of its staff.The Close Brothers narrative says the move has little to do with motor finance and more to do addressing a long overdue cost problem across the business – a problem that has led to it branded as one of ‘Europe’s least cost-efficient lenders’.But it’s a problem Morgan clearly wants to take head on.So much so, he said was “ambitious to go further” even after Tuesday’s announcement of a major job cull.Morgan even played coy on the prospect of more job cuts, stating it was “too early to say how we would go forward”.The bank’s struggling share price might be hoping there is more fuel in the tank. But even as it continues to throw everything at the wall – and kick multiple divisions out the back door – the motor finance threat continues to override any attempt to control the narrative.It’s that very reason that saw the bank’s shares come crashing down over 15 per cent on Monday after an eerie note from short-seller Viceroy warned it had under provisioned before taking another 3.5 per cent hit on Tuesday.<h2 id="h-mid-cap-banks-set-sights-on-cost-cuts">Mid-cap banks set sights on cost cuts</h2>Close Brothers isn’t the only lender ploughing forward with cost-cuts as it looks to leave the car finance scandal in the dust. Ian Corfield, who took the helm at Secure Trust Bank last summer, told City AM that the firm’s new overhaul strategy has little correlation to the motor finance dramas, which the bank has set aside £21m for.“I think we’ve got the opportunity to run a much simpler and, frankly, better business to be working in as we move forward,” Corfield said as Secure Trust laid out plans to fast-track the removal of £25m in costs.The bank exited the vehicle finance in July last year but Corfield said the regulatory environment was “part of the decision”.“Irrespective of the regulatory environment, we would probably have been having the same conversation,” he added.<figure><img height="640" width="960" src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2024/08/santander-customers-in-the-uk-are-currently-unable-to-withdraw-money-from-the-spanish-banks-cash-machines-or-access-online-services-due-to-a-technical-problem-144717585-scaled-1-1.webp/query-dz05NjA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2024/08/santander-customers-in-the-uk-are-currently-unable-to-withdraw-money-from-the-spanish-banks-cash-machines-or-access-online-services-due-to-a-technical-problem-144717585-scaled-1-1.webp/query-dz05NjA"/><figcaption>Santander has called for the government to intervene in the motor finance saga.</figcaption></figure>In Corfield’s defence, ditching motor finance activity has become a common thread through the sector. Santander announced its pivot from the market last April but the City was quick to connect the dots between the move and the £300m hit to its bottom line. The Spanish banking giant’s provisions have since climbed to £461m. The industry is now sitting with bated breath as the Financial Conduct Authority gears up to table its final proposals for its redress scheme this month.What was once feared to be a £44bn bill for the City is now looking at around a quarter of that but it hasn’t stopped sector titans warning of crisis unless the scheme is diluted.Should such a scenario emerge, markets won’t waste time ditching the C-suite cost-cutting narrative and bracing for more stock volatility. </div>

In the wake of the multi-billion pound motor finance scandal, banks are implementing significant cost-cutting measures. Close Brothers plans to cut 600 jobs, representing 20% of its workforce, while Secure Trust Bank is also reducing costs. Despite claims of independence from the scandal, the financial strain is evident, with Close Brothers facing a £65.5m loss and substantial provisions for potential payouts. The industry awaits the Financial Conduct Authority's final proposals for a redress scheme, with expectations of a reduced financial impact compared to earlier estimates.

Is the motor finance scandal making City banks trim the fat?