LONDON, April 1, 2026, 14:02 BST
Lloyds Banking Group on Tuesday said it’s reviewing the Financial Conduct Authority’s finalized motor finance redress scheme—a compensation plan for borrowers who faced unfair treatment. According to the bank, the final version isn’t the same as last October’s draft and “require careful analysis.” 1
The numbers here are big. The FCA says its plan will affect 12.1 million vehicle finance deals made from 2007 to 2024, aiming to get 7.5 billion pounds back to customers. Add in 1.6 billion pounds in operating costs, and companies are looking at a total bill of roughly 9.1 billion pounds. 2
Lloyds faces pressure as Black Horse—one of the group’s key arms—holds a top spot in UK motor finance. Investors won’t have to wait long for new details: the bank’s first-quarter interim management statement lands April 29. 3
Lloyds last bumped up its provision — funds earmarked for anticipated costs — during the third quarter of 2025, pushing the total motor finance charge to £1.95 billion. At the time, the bank described that amount, which includes both compensation and running costs, as its best guess at the potential impact. 4
Some analysts aren’t expecting the FCA’s final package to drive major shifts. Robert Noble at Deutsche Bank called out the scheme’s lighter terms and a reduced bill for the sector. According to Lloyds’ previous guidance, the lender’s provisions shouldn’t need “material” adjustment. Lloyds shares added 1.3% on Tuesday. Bank of Ireland, Close Brothers, and Barclays were also up. 5
The FCA carved out two separate windows for the scheme: April 2007 to March 2014, and then April 2014 through November 2024. The split is designed to keep disputes over legacy loans from holding up compensation tied to more recent borrowing. Firms need to be ready for claims on the later period by June 30, while the deadline for preparing older loan cases falls on Aug. 31. Millions of claims will likely be resolved in 2026, the bulk by end-2027. 6
The bill remains just an estimate for now—not a cap. FCA Chief Executive Nikhil Rathi pointed out the ultimate cost hinges on the number of qualifying borrowers who join. Lawyer Tom Dane at CMS commented the regulator was “tinkering around the edges,” while Ashurst partner Nathan Willmott flagged potential challenges from both lenders and borrowers. 7
Peter Rothwell, KPMG UK’s head of banking, says banks have reached the point where they need to “unpick the detail” and go “from planning to execution.” For Lloyds, that means the focus moves off the rule book and squarely onto the impact on its balance sheet. 8
