Huge UK banking group Close Brothers to axe 600 jobs – £85m in cuts | City & Business | Finance

Banking group Close Brothers will slash roughly 600 jobs in the UK and Ireland over the next 18 months to cut down on annual costs by £85 million. The firm said nearly a quarter of its 2,600-strong workforce would be affected amid a mounting compensation bill for the motor finance scandal.

Close Brothers aims to reduce costs by about £25 million in its current year to the end of September, and another £60 million in the next financial year. To do this, it will outsource and offshore work, cut back its office network and roll out the use of artificial intelligence “at pace”.

CEO Mike Morgan said: “While the impact on affected colleagues is regrettable, these actions are necessary to structurally lower our cost base, while increasing our agility and ability to serve our customers.”

Close Brothers has been embroiled in a scandal regarding the alleged mis-selling of car finance, specifically Personal Contract Purchases (PCPs), through undisclosed commissions that led to unfair interest rates.

It’s accused of using “discretionary commission arrangements” (DCAs), where brokers inflated rates for higher pay, creating conflicts of interest, a practice banned by the Financial Conduct Authority (FCA) in 2021 but affecting past deals.

Millions of UK drivers could potentially be owed compensation, and the firm set aside significant funds for potential payouts following court rulings

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