Lloyds Sets Aside Additional £800m for Motor Finance Compensation, Taking Total to Nearly £2bn
Lloyds Banking Group has earmarked an additional £800 million to cover potential compensation claims related to the UK motor finance scandal, increasing its total provision to almost £2 billion.
The bank is among the most exposed to the ongoing industry-wide issue, which centres on drivers being overcharged for car loans due to commission arrangements between lenders and dealerships. Lloyds had previously allocated £1.15 billion to handle possible costs, but said the new charge reflects a higher likelihood of further historical cases being eligible for redress—particularly those involving “discretionary commission arrangements.”
The updated provision follows the Financial Conduct Authority’s publication of a 360-page consultation paper outlining its proposed redress scheme. The regulator estimated last week that the total cost to UK banks could reach £11 billion, potentially rising to £12.4 billion if all affected customers submit and succeed with claims.
Lloyds cautioned that the final financial impact may still change, stating that the outcome could “evolve in response to representations made by various parties, as well as further legal proceedings, complaints, or any broader implications of the Supreme Court judgment.”
