Lookers has said that it is “cooperating fully” with the Financial Conduct Authority (FCA) as the regulator announced that it was commencing an investigation into the car retail group’s sales process.
Share prices at the franchised retail group - named as the AM100’s number two franchised by turnover (£5.1 billion) last week - dropped by 20% this afternoon (June 25) after news of the investigation was published by the London Stock Exchange.
The dip compounded an ongoing decline in the group’s share price from 108p in January to 52p just this afternoon.
A statement issued on behalf of the group, which climbed above Pendragon to the AM100’s second spot at last week’s AM100 Dinner in Birmingham, said: “The FCA investigation is newly commenced and no findings have been made.
“The FCA will reach its conclusions in due course and, at this stage, the Company cannot estimate what effect, if any, the outcome of this investigation may have.
“The Company is co-operating fully with the FCA in relation to this and will update the market further when appropriate.”
FCA’s investigation into Lookers’ sales processes will cover a period between January 1, 2016, and June 13 this year.
Lookers said that “as disclosed in the 2018 Annual Report and Accounts”, the Board became aware of certain matters requiring review in some areas of the business subject to regulation by the FCA during last year.
In December 2018, the Board commissioned an independent review of the Group's internal control, risk assurance systems and internal audit, it added.
This review, which was 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 group said: “We have invested in both our internal capabilities and external advice. The project will be completed and agreed actions will be implemented as soon as possible.”
Lookers chief operating officer, Nigel McMinn told AM: “We commissioned our own investigation to ensure that we were being as compliant as we could be and now we will work closely with the FCA and cooperate and comply with them in any way they see fit.
“We see this process as an opportunity to sharpen up the business and emerge in a more robust and compliant form that will benefit us and our customers in the long term.”