FirstRand, South Africa's largest bank, is selling its UK challenger bank Aldermore and exiting the UK motor finance market. The move follows the Financial Conduct Authority's (FCA) £9.1bn compensation scheme for car finance mis-selling, which the lender deemed 'deeply flawed' and beyond its 'risk appetite'. FirstRand acquired Aldermore for £1.1bn in 2017 but now cites the scheme's 'disproportionate and unfair' impact, forcing a £510mn increase in provisions to £750mn and a 10-15% earnings forecast cut.

The FCA's scheme, initially estimated at £11bn, now stands at £9.1bn after scaling back eligibility and cost estimates, though lenders argue it remains overly burdensome despite a Supreme Court ruling narrowing potential fallout. Aldermore, holding about 10% of Britain's motor finance market, provides mortgages and business lending alongside auto finance. FirstRand stated it will facilitate an orderly ownership transition, emphasizing shareholder value protection and Aldermore's future success.