Close Brothers Group has significantly increased the funds it has set aside to potential compensation linked to the historic motor finance commission arrangements, following new guidance from the Financial Conduct Authority (FCA). The bank now expects to allocate around £300 million to cover potential redress claims, up from the £165 million previously reserved. The revised figure follows the FCA’s publication of its consultation on October 7, which provided fresh detail on how redress would be calculated and clarified which types of commission agreements fall within the scope of the proposed scheme. According to Close Brothers, this new clarity indicates that the financial exposure it faces is likely to be at the higher end of its earlier projections. The increased provision reflects a greater likelihood that more historic cases will meet the criteria for compensation. The FCA’s proposed redress programme could apply to up to 14.2 million motor finance agreements, citing widespread failures to disclose commission arrangements adequately between lenders and dealerships. The regulator estimates average payouts could be around £700 per affected customer. If these projections are held, total industry compensation could reach as much as £8.2 billion. Investor reaction has been swift. Close Brothers’ share price initially fell by 10% on October 10 after the firm’s first announcement of redress provisions. That decline deepened further following news of the increased estimate, with shares falling an additional 13% to 433.13p. The bank has also voiced concerns about the FCA’s proposed methodology for calculating compensation. It’s argued that the regulator’s model does not align with the Supreme Court’s recent Johnson ruling, which emphasised that fairness should be assessed on an individual basis rather than applying a blanket approach. A formal consultation on the FCA’s redress plans is now underway and is open until November 18. Final details of the scheme are expected to be released later this year, with a full rollout anticipated in early 2026. The banking group says it will continue to engage with the FCA as the consultation process moves forward.