Car loan inquiry puts paid to bonuses for Close Brothers bosses

Senior bosses at Close Brothers have lost out on their annual bonuses amid fears that the merchant bank faces a financial hit from a regulatory inquiry into car loans.
Adrian Sainsbury, the lender’s chief executive who is on temporary medical leave, had been eligible for a £252,328 payout for the group’s performance in the 12 months to the end of July. Mike Morgan, its finance chief, had been in line for a £151,939 bonus.
However, Close Brothers said in its annual report, “in recognition of the shareholder experience, the executive directors and the remuneration committee have agreed that no bonus will be paid”. This meant Sainsbury took home about £1.2 million overall for 2024 and Morgan was paid £705,000.
The lender also said its remuneration policy had been overhauled for 2025 in a move that puts Sainsbury, 56, and Morgan, 58, in line for smaller maximum pay packages, although the variable element is more likely to pay out.
Close Brothers was rocked when the Financial Conduct Authority revealed in January that it was undertaking a wide-ranging retrospective review of the motor finance industry amid concerns that borrowers may have been treated unfairly. The regulator has warned its inquiry could result in lenders being forced to pay customer compensation.
Close Brothers has been a player in motor finance for more than three decades. Worries it is exposed to a potentially large compensation bill have almost halved its share price this year and prompted its bosses to set out a plan to bolster its balance sheet by about £400 million. This has involved shelving the dividend, paring back lending and selling its wealth management unit for as much as £200 million.
The regulator has said that it will update on its next steps by next May, meaning that uncertainty about the inquiry will overshadow much of Close Brothers’ present financial year.
As a result, it is replacing the annual bonuses and long-term share awards that usually form part of the packages for Sainsbury and Morgan with restricted stock awards. This change to its remuneration policy is intended for 2025 only but could be extended to future years if the uncertainty drags on.
It means the maximum payout on offer to Sainsbury for 2025 is £1.8 million, excluding the impact of share price gains, compared with £3.2 million under the “normal” policy, although the restricted stock awards have less stringent performance targets, increasing the likelihood that they pay out. Morgan potentially would earn £1.1 million, rather than £1.9 million. The pair also relinquished their annual bonuses in 2023 after the lender endured a difficult year that hit its shares.
Shares in Close Brothers closed down by 11¾p, or 2.8 per cent, at 407½p.