Close Brothers shares plunged 14% after short seller Viceroy Research accused the UK lender of understating car finance mis-selling liabilities. Viceroy estimates the lender could face £572mn to £1.23bn in compensation costs, far exceeding the £300mn already set aside.

The short seller claims Close Brothers systematically misrepresented its exposure to the UK's mis-selling scandal, potentially facing a wipeout of most equity value if forced into major restructuring. Viceroy alleges the lender's discretionary commission arrangements created structural exposure far higher than peers.

Close Brothers rejected the claims, stating its provisioning approach follows UK-adopted international accounting standards and robust governance processes. The lender has been restructuring under CEO Mike Morgan, including selling its asset management business and cancelling dividends. Viceroy did not disclose its short position size but stands to benefit from share declines.