Lloyds Banking Group is setting aside an additional \u00a3800m for car finance compensation claims, bringing the total amount allocated by the bank for redress to nearly \u00a32bn.<\/p>\n
The company said that the number of eligible claims is expected to be higher than previously thought.<\/p>\n
Millions of drivers who bought cars on finance with hidden commission payments between 2007 and 2024 may be eligible for redress.<\/p>\n
The Financial Conduct Authority (FCA) published details of its proposed compensation scheme last week<\/a>.<\/p>\n The FCA said payouts could be due on around 14 million unfair deals, averaging at about \u00a3700 each.<\/p>\n This could result in lenders paying out a total of \u00a38.2bn in compensation.<\/p>\n The payouts are over commission arrangements between lenders and dealers, unfair contracts, and inaccurate information given to car buyers.<\/p>\n Lloyds said in a statement: “Based on the FCA proposals in their current form, the potential impact is at the adverse end of the range of previous expected outcomes.”<\/p>\n It said it was setting aside an additional \u00a3800m for redress based on “the increased likelihood of a higher number of historical cases… being eligible for redress”.<\/p>\n It said its “best estimate” of the total cost of redress was \u00a31.95bn.<\/p>\n The proposed scheme would be free to access for consumers, although the interest they receive on redress will be much lower than that paid following the payment protection insurance (PPI)<\/a> scandal.<\/p>\n That scandal cost Lloyds \u00a322bn.<\/p>\n The FCA estimates that 44% of all motor finance agreements made since 2007 will be eligible for payouts.<\/p>\n But a ruling at the Supreme Court in August limited the breadth of these cases.<\/p>\n