The FCA has told Lookers that it does not intend to apply any sanction against the car retail group following the decision to close its investigation into the ‘possible mis-selling’ of regulated products.
The AM100’s second-placed car retailer by turnover issued an update via the London Stock Exchange in connection with the investigation by the Financial Conduct Authority’s Enforcement Division this morning (March 2).
It said that the investigation into the group's sales processes between the period of January 1, 2016, to June 13, 2019 – originally announced on June 25, 2019 – has now ended.
The move allows Lookers to release its provision of £10.4 million which was made in relation to any potential liabilities arising from the investigation."
Lookers’ statement said: “In closing the case, the FCA further advised the board that it does not intend to use its statutory powers to apply any sanction against the group in relation to the matters under investigation.
“However, the FCA made its concerns clear relating to the historic culture, systems and controls of the group.
“The board fully accepts the FCA's comments and is committed to continue the progress made to date in transforming both culture and the customer experience.
Lookers’ statement added that the group continues to have an “open and cooperative relationship” with the FCA supervisory team.
Chief executive, Mark Raban, said: "It is an important time for Lookers as we emerge from a difficult period dealing with both the challenges of our legacy issues and COVID.
“We are pleased that the FCA has decided to close its investigation and we can now look forward and continue to build our business for the benefit of our customers and other stakeholders."
Lookers’ FCA investigation has long been part of a double-whammy of issues affecting the group’s trading in recent years, with an internal investigation into financial fraud also impacting its results and causing a temporary suspension of shares trading due to the late submission of 2019 financial results.
Lookers was finally able to publish its 2019 financial results in November last year, revealing a £87.4m swing into pre-tax losses caused partly by past financial overstatements.
The group reported £25.5m of non-cash adjustments “to correct misstatements in PBT over a number of years”, its statement to the stock market noted at the time.
It contributed to a statutory pre-tax loss of £45.5m compared with a pre-tax profit of £41.9m in 2018.
However Lookers pointed out that 2019 remained profitable at the underlying PBT level of £4.2m, although down on 2018’s £42.8m, despite the impact of the adjustments.
At the end of January AM reported that Lookers had recommenced shares trading on the London Stock Exchange following publication of interim financial results for 2020, which revealed a £50m loss in a COVID-impacted H1, 2020.
The group suffered a 40% decline in revenues, to £1.56bn, and a 355.1% decline on pre-tax profits, to record a £50m loss, during the six-month period to June 30.
In today’s statement, Lookers said that “having already invested in a major remediation plan, including new systems, controls and process improvements, the board remains fully committed to the group's ongoing investment programme, driving the creation of the right culture, working towards an industry leading customer experience”.
Speaking after January’s publication of Lookers’ 2020 interim financial results, Raban said: “I would like to thank all my colleagues for their continued dedication in these difficult circumstances and also our OEM brand partners for their ongoing support.
“Going into 2021 there remains a high level of uncertainty in the wider environment, but we are confident that the group is now much better positioned for the longer term and can capitalise on the various opportunities ahead, not least in electrification and digital developments.”