LONDON, April 2, 2026, 13:04 BST.
Lloyds Banking Group said Thursday it’s sticking with the £1.95 billion provision for motor finance compensation, following a review of final rules from the UK watchdog on the sector-wide payout scheme. After looking over the regulator’s decision, the company found no need to boost its reserves for now. Investors are set for another update when first-quarter results drop on April 29. Investegate
This is especially pressing for Lloyds. Its Black Horse motor finance unit is right in the thick of the scandal. The Financial Conduct Authority’s sector-wide redress plan, as reported by Reuters, is set to include some 12.1 million agreements. Payouts average about £830, and the industry’s total bill could be in the region of £9.1 billion. Reuters
Barclays earmarked £325 million, while Close Brothers put aside £300 million for the matter. Earlier this week, Close Brothers said it’s still weighing the fallout—a sign the FCA’s decision hasn’t resolved the sector-wide tab. Scottish Widows
Deutsche Bank’s Robert Noble doesn’t see Lloyds making any significant adjustments. According to Noble, the finalized scheme ended up less harsh than the initial version, so Lloyds should remain near its existing reserve. London South East
Peter Rothwell, who leads banking at KPMG UK, said the FCA’s decision offered banks more certainty but didn’t spare them a “substantial exercise”. His words were clear enough: lenders now have to “move quickly from planning to execution”. WealthBriefing
The scheme, which doesn’t cost drivers anything, targets motorists who weren’t properly informed about commissions or lender referrals—issues the FCA flagged as possible reasons for inflated loan charges. The regulator is pressing for millions in payouts to reach claimants this year. FCA
Lloyds bumped up its reserve by £800 million in October, bringing the total to £1.95 billion, after the FCA’s earlier review indicated more cases going back to 2007 might be included. Then in January, the bank warned that motor finance costs would hit 2025 results, despite reporting a 12% jump in annual profit and raising its 2026 profitability goal. Reuters
The bill remains unsettled. Reuters reported the FCA trimmed its top-line figure after dropping the expected claimant rate to 75% from 85%. Still, AJ Bell’s Danni Hewson warned the process could drag if lenders or claimants pursue more legal action. Reuters
