Shares of Manchester-based car dealership Lookers plc have lost almost a quarter of their value in the past two days following its announcement that the Financial Conduct Authority (FCA) intends to carry out an investigation into the company’s sales processes between January 1, 2016 and June 13, 2019.
“The FCA investigation is newly commenced and no findings have been made,” said Lookers.
“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.”
On March 13, Lookers said its 2018 turnover increased 3.9% to £4.88 billion thanks to growth in its used cars and after sales businesses.
However, adjusted profit before tax slipped 1.6% to £67.3 million, hurt by lower sales of new cars in the UK and higher costs.
In its statement on the FCA investigation, Lookers added: “Lookers plc, one of the leading UK motor retail and aftersales service groups, issues the following statement in connection with a review into the controls and processes of its regulated activities.
“Adapting to developments in regulation affecting the motor retail industry and the fast pace of change of customer demands and behaviours, is a key challenge and an important priority for the group.
“As disclosed in the 2018 Annual Report and Accounts, during last year the board became aware of certain matters requiring review in some areas of the business subject to regulation by the Financial Conduct Authority.
“In December 2018, the board commissioned an independent review of the group’s internal control, risk assurance systems and internal audit.
“This review, which we 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.
“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 …”