Car dealership group Lookers has revealed a £10m cash investment as part of a remediation plan following the Financial Conduct Authority (FCA)’s decision to investigate the firm.
The £10m remediation plan will include a detailed review of past business; the establishment of a revised sales process; a full training exercise across the group; establishment of a new risk management and quality assurance framework; and several developments to the group’s IT systems.
A one-off £7m investment will be made in 2019, followed by a £3m investment next year.
The FCA told Lookers in June that it would be investigating the firm’s sales processes between the period of 1 January 2016 to 13 June 2019. The Lookers board said at the time that it had uncovered ‘certain matters requiring review’ in its 2018 annual accounts, which it then commissioned an independent review of in December 2018.
Lookers said in a statement: “The Board takes this matter very seriously and continues to co-operate and co-ordinate fully with the FCA. We believe that adapting to developments in regulation, which affects the retail motor industry and the fast pace of changing customer demands and behaviours, is a key challenge and an important priority for the Group.
“When these improvements are fully deployed across the Group, our strengthened infrastructure and enhanced customer experience will create a robust and industry leading platform that will facilitate further growth.”
Lookers said pre-tax profits were down 39.7% to £2.6bn in the first half of 2019. Like-for-like gross profits on new and used cars were down 2.2% and 2.8% respectively, while gross profit on aftersales was up 2.9%.
Andy Bruce, chief executive of Lookers, said the performance for the first half reflects an ongoing backdrop of challenging UK market conditions for the sector. “Whilst we are reporting lower profits year-on-year, we have made good progress on a number of strategic initiatives and have a clear investment plan to restructure and strengthen our regulated activities.
“Our balance sheet remains strong including our valuable property portfolio. Working closely with our brand partners I am confident in the long-term prospects for the business. The Board’s current outlook for the full year at the underlying profit before tax level remains unchanged.”