Lookers faces finance sales investigation
25 June 2019
The Financial Conduct Authority (FCA) is to carry out an investigation into Lookers’s regulated financial sales processes over the past three and a half years. The auto retail group has told investors it is co-operating fully with the enquiry but “cannot estimate what effect, if any, the outcome of this investigation may have”.
The FCA has wide ranging powers to ban companies or individuals from selling regulated finance, or impose substantial fines, in the event of misconduct. Earlier this year it fined CarphoneWarehouse just over £29m for breaches related to mis-selling in the general insurance and protection sector. Fines can be mitigated by co-operating in the enquiry.
Lookers shares dropped nearly 20% on the news although the group claimed it originally highlighted a potential problem in its recent 2018 Annual Report and Accounts.
In a stock market statement Lookers said: “In December 2018, the board commissioned an independent review of the group’s internal control, risk assurance systems and internal audit.
“This review, which we shared with the FCA, indicated that there were some control issues in the sales process in the group’s regulated activities which will require an improvement plan to be implemented. The project will be completed and agreed actions will be implemented as soon as possible.”
“Adapting to developments in regulation affecting the motor retail industry and the fast pace of change of customer demands and behaviours is a key challenge and an important priority for the group.”
Despite this the FCA has decided to act and told the company it intends to carry out an investigation into the company’s sales processes between the period of 1 January 2016 to 13 June 2019.