The new PPI?

Another Fine Mezz

With a host of special guests dominating the Another Fine Mezz podcast in recent weeks, this week's normal episode with host Tom Lemmon and European ABS reporter, George Smith, felt almost unusual.

As was long-predicted, European securitization markets have been fairly quiet since Donald Trump's second election victory on November 5. However, a ruling by the UK Court of Appeal on motor finance meant there was plenty to chew over.

The ruling found unexpectedly in the favour of the consumer and is broader than first considered by many auto ABS market participants. As a result, it brings into question whether UK auto ABS deals that are still outstanding and upcoming transactions could now be hit by a wave of claims from consumers that they were mis-sold car finance.

There is still so much that's unclear with appeals to the Supreme Court expected, but there are now genuine fears that this could lead to even bigger total compensation than the Payment Protection Insurance (PPI) scandal of the early 2000's. (And therefore, a new decade of no-win-no-fee lawyer adverts).

Meanwhile, George also took a closer look at how UK banks are looking to manage their regulatory capital, particularly their mortgage portfolios, through securitization.