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Section 172 (1) statement and statement of engagement with other stakeholders
In accordance with the Companies Act 2006 (the “Act”), the directors provide the following statement describing how they have had regard to the matters set out in section 172(1)(a) to (f) of the Act when performing their duty to promote the success of the company under section 172.
Section 172 requires a director to have regard to the following matters, among others, when discharging their duty:
• the likely consequences of any decision in the long term;
• the interests of the Company’s employees;
• the need to foster the Company’s business relationships with suppliers, customers and others;
• the impact of the Company’s operations on the community and the environment;
• the desirability of the Company maintaining a reputation for high standards of business conduct; and
• the need to act fairly as between members of the company.
The board of directors of the Company ("the Board") is responsible for managing the affairs of the Company to achieve its long-term prosperity by making important decisions, monitoring the underlying performance of the company, as well as being a means for establishing ethical standards. Understanding the interests of key stakeholders is an important part of CBG’s strategy and helps inform the directors’ decision making throughout the year.
Board meetings are held as required where the directors will consider the Company’s principal activities and make decisions. Meetings are scheduled to provide adequate time for consideration and discussion by the directors of the interests of stakeholders, and for the directors to seek further information from management, as required. As a part of those meetings, the directors receive information in a range of different formats to assist them in discharging their responsibilities under Section 172 when making relevant decisions. This information may include, among other things, reports and presentations on financial and operational performance, business updates, budget planning and forecasts, HR matters, as well as specific areas of engagement, such as employee opinion surveys. When making decisions, the Board seeks to understand the impact on each of its stakeholders, including the likely consequences of a decision in the long term, whilst acknowledging that a decision will not necessarily be favourable for all stakeholders, as there may be competing interests between them.
The Company is part of CBG, and as such it follows a range of CBG-wide policies in place to protect employees and provide a safe working environment, to ensure compliance with all regulatory requirements and adherence to the highest professional and ethical standards in dealing with customers, suppliers and colleagues, as well as ensuring that it continues to be cognisant of its social and environmental responsibilities. In doing so, and by balancing the interests of the Company’s stakeholders when making decisions, the Board seeks to maintain a reputation for high standards of business conduct. Further information on these CBG-wide policies can be found in the annual report and accounts of the company’s ultimate holding company, CBG.
The directors seek to engage directly with stakeholders wherever possible on certain issues, though the size of CBG means that stakeholder engagement often takes place at an operational or CBG level. This approach creates greater efficiency and facilitates a greater positive impact on environmental, social and other issues than may be possible at an individual company level, as well as ensuring consistency of approach across CBG. Where engagement has taken place at operational level, the outcome of that engagement has been brought to the Board for its consideration where relevant throughout the year. Additional details on engagement at CBG level with stakeholders, including employees, suppliers, customers, the community and environment can be found in the Strategic Report section of the Annual Report and Accounts of CBG.
The table and case studies below set out further examples of the ways in which the Board has engaged directly and indirectly with stakeholders during the financial year, as well as detailing how the Directors have had regard to employee interests and the need to foster the company’s business relationships with suppliers, customers and others, and the effect of that regard, including on principal decisions taken throughout the year, as well as matters set out in Section 172 (1)(a)-(f) when discharging their duties under Section 172.
OUR STAKEHOLDERS
Colleagues
WHY WE FOCUS ON THEM AND THE IMPACT OF ENGAGEMENT
The Company directly employs approximately 225 employees around the UK and Ireland, and is part of the Commercial Division with approximately 1,000 employees around the UK, Republic of Ireland and Germany.
We have a diverse and motivated workforce which delivers the highest levels of service to our customers, clients and partners. We are committed to the development of our colleagues, ensuring they are supported and engaged.
Listening to our colleagues enables us to build an engaged workforce, allowing us to develop and retain high levels of expertise. We are able to ensure we are considering the views of all colleagues and making sure everyone feels included.
STAKEHOLDERS’ KEY PRIORITIES
• A safe working environment.
• A fair and inclusive culture where employee feedback is valued.
• Being appropriately rewarded for their contributions.
• Opportunities for training and development.
HOW THE BOARD AND MANAGEMENT HAVE ENGAGED AND CONSIDERED STAKEHOLDER INTERESTS DURING THE YEAR
• We participated in the latest CBG employee opinion survey, which closed in May 2026, to gather feedback from our colleagues anonymously. The results of this survey gave us insight into key topics including customers and clients, culture, a sense of belonging, and comfort in speaking up.
• Managers were assigned access to the survey results for their teams to understand more around colleague sentiment and determine localised action plans. This ensures we are focusing on the areas that matter most to our colleagues, as well as ensuring we are meeting the needs of other stakeholders.
• We held regular town halls, providing employees with updates from across the business and the opportunity to ask questions directly to senior management.
• We continued to engage with colleagues at the point of joining, when returning from parental leave and celebrating work anniversaries, through completing surveys to share their personal experiences of working at Close Brothers.
• We have eight employee-led inclusion networks which act as a voice for our colleagues
• Review and discussion of a culture dashboard by Commercial Division Risk and Compliance Committee, providing an overview of matters relating to culture, conduct and values.
OUR STAKEHOLDERS
Customers and partners
WHY WE FOCUS ON THEM AND THE IMPACT OF ENGAGEMENT
Customers and partners are central to our purpose. We aim to help them access financial solutions that meet their needs, supported by specialist expertise, responsive service and trusted relationships.
STAKEHOLDERS’ KEY PRIORITIES
• They value consistent service, products that deliver value, strong personal relationships, fair conduct and support that adapts to changing economic, technological and regulatory conditions.
• Our approach is to be flexible, clear and responsive, making decisions informed by expertise and executing with pace. We want customers, partners and colleagues to feel valued and confident, and to find it easy to do business with us.
• Listening, learning and acting is central to this. We gather feedback, monitor sentiment and use long-running customer forums to bring the voice of the customer into decision-making. Feedback from forums, customer metrics and operational insight helps us improve processes, collaborate across teams and enhance the customer experience.
HOW THE BOARD AND MANAGEMENT HAVE ENGAGED AND CONSIDERED STAKEHOLDER INTERESTS DURING THE YEAR
• During the year, we continued to monitor customer outcomes, complaints and customer feedback across its businesses. Regular reporting was provided to management and governance forums to support oversight of customer treatment and conduct-related matters.
• We continued to invest in processes, systems and colleague capability to improve customer service and operational efficiency, while maintaining a focus on delivering good customer outcomes.
• Feedback from customers, clients and partners was considered as part of ongoing business reviews and change initiatives, helping to identify opportunities to improve products, services and the overall customer experience.
• We continued to strengthen its approach to capturing, analysing and acting upon customer, client and partner feedback across end-to-end customer journeys. Insights from customer outcomes, feedback and operational performance were used to inform decision-making and support continuous improvement.
• Looking ahead, we will continue to capture, consolidate and act on customer and partner sentiment across end-to-end journeys, helping to enhance customer experience, improve service delivery and support long-term customer loyalty.
OUR STAKEHOLDERS
Regulators and Government
WHY WE FOCUS ON THEM AND THE IMPACT OF ENGAGEMENT
We are committed to sustaining high standards of business conduct in line with regulatory, governmental and legal expectations and operate prudently within the laws and regulations that apply to us.
We foster an open, transparent and cooperative relationship with regulators, government authorities and trade associations in the jurisdictions in which we operate. Active engagement helps to ensure we are aware of and adapting to the evolving regulatory framework.
STAKEHOLDERS’ KEY PRIORITIES
• Achieving good customer outcomes.
• Operational and financial resilience.
• Strategic risk management.
• Financial crime prevention.
• Corporate social responsibility.
• Digitisation, use of Artificial Intelligence and enhanced data analytics.
• Supporting growth and innovation.
HOW THE BOARD AND MANAGEMENT HAVE ENGAGED AND CONSIDERED STAKEHOLDER INTERESTS DURING THE YEAR
• Regulatory risk, compliance and conduct reporting was provided to management and governance forums throughout the year, supporting oversight of regulatory developments, emerging risks and customer outcomes.
• As part of CBG, we have engaged constructively with regulators and supported responses to areas of regulatory focus, including the FCA’s review of historical motor finance commission arrangements and proposed redress scheme.
• We continued to monitor and respond to evolving regulatory expectations, including Consumer Duty requirements where relevant, to ensure consideration of customer outcomes, product governance, customer communications and support for customers in vulnerable circumstances.
• We participated in wider Group regulatory, risk and compliance initiatives, helping to ensure that policies, controls and governance arrangements remained aligned with legal and regulatory requirements.
• Reporting, analysis and management information were reviewed throughout the year to support effective oversight of conduct, compliance and operational resilience risks and to enable informed decision-making.
OUR STAKEHOLDERS
Suppliers
WHY WE FOCUS ON THEM AND THE IMPACT OF ENGAGEMENT
Our business continues to be supported by a diverse and reliable network of suppliers, which plays an important role in enabling us to deliver consistently high standards of service to our customers, clients and partners. We are committed to maintaining transparent, sustainable and mutually beneficial supplier relationships, underpinned by fair commercial practices, clear expectations and effective oversight.
Our approach to supplier engagement is based on openness, accountability and collaboration. We work with suppliers to support delivery against our business objectives, while identifying opportunities to improve service, strengthen controls and achieve better long-term outcomes for Close Brothers and its stakeholders.
STAKEHOLDERS’ KEY PRIORITIES
• Building strong, sustainable relationships.
• Fair, ethical and equitable business conduct.
• Supporting clear, timely and efficient processes.
• Understanding and aligning with the group’s purpose, strategy and priorities.
• Maintaining robust and proactive risk management.
• Delivering good service outcomes and operational resilience.
• Achieving appropriate commercial value.
HOW THE BOARD AND MANAGEMENT HAVE ENGAGED AND CONSIDERED STAKEHOLDER INTERESTS DURING THE YEAR
• We continued to engage with suppliers through established relationship management, oversight and governance processes. This included regular engagement with key strategic suppliers to review service performance, discuss emerging risks, monitor delivery against expectations and identify opportunities for improvement. We also continued to develop our approach to supplier oversight, with a focus on ensuring that supplier relationships remain aligned to business needs, regulatory expectations and our risk management framework. This supports greater transparency across our supplier population and helps ensure that appropriate attention is given to suppliers that are material to our operations, customers or resilience.
• We remain committed to building strong, collaborative supplier relationships that support mutual success, effective risk management and the continued delivery of good outcomes for our customers, clients, partners and the wider business.
• We continue to report supplier payment statistics including average days to pay suppliers.
OUR STAKEHOLDERS
Communities and Environment
WHY WE FOCUS ON THEM AND THE IMPACT OF ENGAGEMENT
Close Brothers is committed to contributing long-term value and making a positive impact on the communities in which we operate and the environment more broadly. This underpins the growing range of programmes and initiatives we support that benefit society and the environment.
Engaging with local communities helps the Board and our employees develop their understanding of our customers and partners so that we can support them and help them to achieve their ambitions, whilst also building employee engagement. We firmly believe that environmental considerations should form an integral part of our business decisions, and employees across the group are actively engaged on responsible behaviours and environmental issues.
STAKEHOLDERS' KEY PRIORITIES
• A suitable strategy for approaching sustainability issues.
• Support for community initiatives.
• Take active steps to ensure equity of opportunity, regardless of background or experience.
• A long-term focus on addressing the impacts of climate change.
HOW THE BOARD AND MANAGEMENT HAVE ENGAGED AND CONSIDERED STAKEHOLDER INTERESTS DURING THE YEAR
• We supported numerous volunteering activities to positively impact local communities, including volunteering at food banks, soup kitchens and local hospices and supporting youth groups such as Guides, Scouts and children’s sports teams.
• Several colleagues, including members of our Group Executive Committee, continue to fulfil trustee roles for various charities to support local communities.
• We supported social mobility and disability awareness programmes, hosting 14 interns across the group in partnership with upReach and Access Interns.
OUR STAKEHOLDERS
Investors
WHY WE FOCUS ON THEM AND THE IMPACT OF ENGAGEMENT
The Company is a wholly owned member of CBG, forming part of the Commercial Division; as such it operates as part of the broader Group in delivering its purpose and strategic objectives, in line with Group-wide processes, governance and culture
Close Brothers has a proven and resilient business model and is focused on generating long-term, sustainable value for its investors, while also maintaining a strong balance sheet.
Our investors are the providers of capital to our business so it is important that we engage actively with them and listen and respond to their feedback through an established and comprehensive programme throughout the year.
STAKEHOLDERS’ KEY PRIORITIES
• Strong returns and financial resilience through the cycle.
• Managing the potential impact on the Group following the FCA’s review on motor finance commission arrangements, while protecting our business franchise.
• Capital generation and distributions.
• Sustainable business model.
• Appropriate governance practices and regard for environmental and social responsibility.
HOW THE BOARD AND MANAGEMENT HAVE ENGAGED AND CONSIDERED STAKEHOLDER INTERESTS DURING THE YEAR
• Although the Company has a sole shareholder, the directors have appropriate oversight of, and regard to, wider Group investor interests and considerations when making decisions.
• Updates on the operation, performance and strategic development of the Company are provided to Group-level management and governance forums, including the boards of CBG and CBL, as appropriate.
• As part of the wider Group, the Company's performance, strategy and outlook contributed to external investor communications. In March, alongside the Group's Half Year Results, the Commercial Division participated in a divisional deep-dive business update, providing investors with detailed insight into the Division's performance, strategic priorities and pathway to achieving its medium-term targets.
• The Company participates in Group-wide initiatives and programmes, including those supporting consideration of the interests of other key stakeholder groups, including customers, employees, suppliers and regulators.
• Budgets, forecasts and financial plans are developed as part of the wider Group planning process, helping to ensure alignment between the Company's strategy, capital requirements and long-term objectives.
• The Company participates in broader enterprise-wide risk, regulatory and compliance initiatives, supporting effective governance, resilience and sustainable long-term value creation.
Section 172 (1) Statement And Statement Of Engagement With Other Stakeholders continued
Furthermore, set out below is an additional detailed example of the way in which the directors of the Company have engaged directly with key stakeholders during the financial year, how stakeholder interests have been considered in the decision-making of the directors, and how the directors have had regard to the matters set out in Section 172 (1)(a)-(f) when discharging their duties under Section 172. The Company is a wholly owned subsidiary of Close Brothers Limited and, as such, the duty of directors to have regard to the need to act fairly as between members of the Company is limited.
Commercial Transformation and Future Operating Model
During the financial year, the Commercial Division commenced implementation of its future operating model as part of the wider multi-year Bank Transformation programme, which was announced to the market alongside the Group's Half Year Results in March 2026. The programme is designed to simplify the operating model, improve efficiency, enhance customer service and support the long-term sustainability and competitiveness of the business.
The Board of the Group's consideration of the programme is supported by a dedicated transformation team, with regular updates provided to Commercial Executive Committee, of which the directors of the Company are members. This enables the directors to consider stakeholder interests throughout the decision-making process and assess the potential impact of the proposed changes on colleagues, customers, brokers and the wider business.
The Board of the Group’s implementation decision was guided by a comprehensive assessment of the factors outlined in Section 172(1) of the Companies Act, including:
• Long-term consequences: The Board recognised that increasing operational complexity, duplicated processes and changing customer expectations could impact the long-term competitiveness and scalability of the business if not addressed. The proposed operating model is intended to simplify operations, improve efficiency and support sustainable future growth.
• Employee interests: The Board considered the impact of the proposed changes on colleagues, including the need for organisational restructuring and consultation processes. Particular focus has been given to ensuring clear communication, meaningful consultation and appropriate support for affected colleagues throughout the transition.
• Customer, broker and partner relationships: The Board considered the impact of the changes on customers, brokers and other business partners. A key factor in the decision was maintaining service continuity throughout implementation whilst creating simpler customer journeys, improving consistency of service and supporting better long-term customer outcomes.
• Business conduct and operational resilience: The Board considered the implications for operational resilience, governance and risk management. The programme continues to be implemented through a phased approach to minimise disruption, maintain appropriate controls and ensure the continued delivery of high standards of business conduct.
• Reputation and stakeholder engagement: The Board recognised the importance of maintaining the trust and confidence of customers, colleagues, brokers and other stakeholders. Regular governance, oversight and stakeholder engagement has helped ensure that stakeholder interests remain central to decision-making throughout the programme.
As a result, the directors of the Company support the implementation of the future operating model, with continued focus on colleague engagement, customer service continuity, operational resilience and effective governance throughout the transition. The Company was factored into considerations when designing the future operating model, however current implementation has not had a material impact on the Company during the financial year.
