LONDON, April 3, 2026, 12:02 BST
Lloyds Banking Group said on Thursday it did not expect to add to the 1.95 billion pounds it has set aside for expected payouts tied to Britain’s motor-finance mis-selling scandal after reviewing the Financial Conduct Authority’s final rules. The bank said its existing provision — money reserved to meet expected claims — was unchanged for now.
That matters because Lloyds owns Black Horse, Britain’s largest car-finance lender, so the final shape of the scheme matters more here than for many peers. The FCA says the clean-up will return about 7.5 billion pounds to borrowers who were not properly told about commissions — payments from lenders to dealers — and other commercial ties in car loans, while the total bill to firms has been cut to 9.1 billion pounds from 11 billion after tighter eligibility rules.
About 12.1 million agreements written between April 2007 and November 2024 are now eligible, down from 14.2 million at consultation, and the FCA pegs average compensation at about 829 pounds a deal. It expects millions of consumers to be paid this year, with most of the rest by the end of 2027, and firms have until June 30 or August 31, depending on the age of the loan, to get their processes ready.
Analyst reaction was split. Derren Nathan at Hargreaves Lansdown said Lloyds may have “set aside more than it needs”, while Benjamin Toms at RBC said it was “highly likely” that at least one interested party would ask the courts to review the scheme. City AM
The reserve already reflects a big hit taken last year. Lloyds’ 2025 annual report said the group booked an additional 800 million pounds in the third quarter for potential motor-finance redress, taking the total provision to 1.95 billion pounds.
The first market read was cautious. Lloyds shares fell 1.6% to about 96 pence in early trade on Thursday, even after the update, while Barclays and Close Brothers each lost about 2% as investors weighed the lower sector bill against lingering legal risk.
Lloyds itself was careful not to overplay the news. It said response rates, operating costs and litigation remained uncertain, and that the final outcome could still change depending on complaints and legal proceedings, with a fuller update due alongside first-quarter results at the end of April.
But the picture is not settled. The FCA split the scheme into one track for pre-2014 loans and another for later business to stop older cases holding up newer payouts, a sign that the fight over car-finance claims is not over. For now, Lloyds is holding the line on the reserve and saying customers should still get timely redress.
