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published by Global Banking & Finance Review®
Posted on 7 April 2026
2 read minutes
FirstRand to pull out of UK Aldermore, boost provisions after 'flawed' motor finance redress scheme
FirstRand's strategic shift and financial impact
(After the company corrected its figures, paragraph 6 has been changed to show the earnings contraction forecast is 4% to 9%, not 10% to 15%, and the ROE forecast is at or just below the stated range, not below the bottom of the range)
FirstRand's exit from Aldermore
April 7 (Reuters) – South Africa's FirstRand said on Tuesday it plans to exit its UK challenger bank Aldermore after it cut its earnings forecast and blamed a costly and “deeply flawed” British motor finance resolution plan.
Increase in provisions for motor finance redressal
The financial services group increased its provisions for mis-sold motor loans from 510 million pounds to 750 million pounds ($993.4 million), saying it had done everything in its power to protect shareholders from a disproportionate and unfair scheme.
Statement on Shareholder Value and Transition
“To protect shareholder value and ensure the future success of Aldermore, the group will work with the Aldermore board and relevant regulators to facilitate an orderly ownership transition,” the group said in a statement.
Background: FCA's motor finance redress scheme
After months of wrangling with the industry, Britain's Financial Conduct Authority (FCA) last month asked the motor finance industry to compensate UK motorists for unfair vehicle loans worth almost £9.1 billion in one of Britain's costliest financial mis-selling scandals.
FCA allegations and industry practices
The FCA has accused the industry of inadequate disclosure of commissions and contractual relationships between lenders and car dealerships, saying this has encouraged brokers to increase vehicle loan rates between 2007 and 2024.
Financial Forecasting and Market Reaction
Updated Earnings and ROE Forecast
FirstRand, which bought Aldermore in 2017, said it now expects the group's full-year normalized earnings after motor provision to contract between 4% and 9% and its return-on-equity (ROE) to be at or just below the lower-end of the previously reported range.
regulatory response
The FCA had no immediate comment.
currency note
($1 = 0.7550 pounds)
reporting credit
(Reporting by Kirsten Ridley in London and Dhanush Vignesh Babu in Bengaluru; Editing by Sahal Muhammad and Susan Fenton)