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S&U PLC (LSE:SUS) announced on Monday that it remains confident about its outlook despite experiencing mixed trading performance over the past two months.
Trading Trends and Sector Performance
In its statement covering the period from June 6 to July 31, the West Midlands-based lender, which focuses on motor finance and property, highlighted contrasting trends within its operations. Aspen Bridging, the company's property lending division, has continued to exhibit strong and profitable growth.
Conversely, the motor finance division, represented by Advantage Finance, is undergoing a period of consolidation and retrenchment. This situation is largely due to an investigation by the Financial Conduct Authority (FCA) into potential overcharging on car loans.
FCA Investigation and Impact on Motor Finance
In July, the FCA extended the deadline for motor finance companies to address customer complaints. The investigation, which began at the start of the year, concerns the possibility that many consumers were overcharged for car loans through discretionary commission arrangements. This practice, banned in 2021, allowed brokers to adjust interest rates to increase their commission payments.
Company’s Response and Future Outlook
S&U PLC indicated that the ongoing discussions with the FCA will result in a notable impact on Advantage Finance's profitability for the first half of the year. However, the company has a plan in place to address these challenges and anticipates a recovery in the latter half of the financial year. S&U expects Advantage Finance to return to a profitable trajectory as a result.
CEO’s Statement on Company’s Performance
Chairman Anthony Coombs acknowledged the current difficulties faced by Advantage Finance but expressed confidence in overcoming these challenges. He highlighted the continued strong performance of Aspen Bridging and reaffirmed the company's commitment to achieving a significant rebound in the second half of the year. Coombs emphasized the company's determination and confidence in the future.
