Home / Business and Economy / Lloyds Bank Skips Car Finance Payout Challenge
Lloyds Bank Skips Car Finance Payout Challenge
11 Apr
Summary
- Lloyds Bank will not challenge the regulator's 9.1 billion pound compensation scheme.
- The scheme compensates motorists for allegedly mis-sold car finance.
- FCA mandated compensation over undisclosed commissions and dealer ties.
Lloyds Banking Group has announced it will not pursue a legal challenge against the UK financial regulator's 9.1 billion pound compensation scheme. This scheme is designed to compensate consumers who were allegedly mis-sold car finance products.
The Financial Conduct Authority (FCA) recently instructed the UK's motor finance industry to provide compensation. This directive stems from inadequately disclosed commissions and contractual links between lenders and car dealerships, which occurred over a 17-year period concluding in 2024.
While Lloyds Banking Group stated it disagrees with the FCA's conclusions, a spokesperson indicated that moving forward with the scheme is now the appropriate course of action for its customers and shareholders. The bank had previously considered legal action, believing the regulator had not adhered to court judgments.
The total estimated cost of the scheme was adjusted downwards from an initial 11 billion pounds. This reduction was due to lower forecasts for administrative expenses, refined eligibility criteria, and reduced estimates for motorist participation.
