Lloyds Bank has confirmed it still expects to pay more than £1 billion in compensation linked to the motor finance scandal, despite the Supreme Court’s ruling on Friday.
In a statement on Monday, the UK’s largest car finance lender — via its Black Horse division — said its anticipated payout remains broadly in line with earlier estimates provided to investors.
“After initial assessment of the Supreme Court judgment, and pending resolution of the outstanding uncertainties, in particular the FCA redress scheme, the group currently believes that if there is any change to the provision, it is unlikely to be material in the context of the group,” the bank said.
Lloyds has already set aside a £1.15 billion provision for potential claims. The bank noted this will be kept under review as more information becomes available. Shares in Lloyds rose 6% on Monday morning following the update.
Bank Shares Surge After Supreme Court Ruling on Car Finance Claims
Shares in some of the UK’s largest banks surged on Monday morning after the Supreme Court rejected the majority of compensation claims related to the motor finance scandal.
Lloyds Banking Group, Britain’s largest car finance provider via its Black Horse division, rose 6% in early trading. Shares in Close Brothers soared 25%, while Secure Trust Bank jumped 19%, and Barclays gained 1.8%.
The sharp rally follows Friday’s court decision — delivered after markets closed — which largely dismissed allegations of widespread mis-selling of car loans. The ruling had been delayed to avoid market disruption, amid concerns the claims could result in up to £44 billion in payouts.
In the aftermath, the Financial Conduct Authority (FCA) confirmed that its forthcoming redress scheme is likely to cost between £9 billion and £18 billion, significantly lower than the worst-case scenario feared by investors.
