London, June 10, 2026, 12:05 BST
- Lloyds was quoted at 97.42p/97.46p, down 0.75%, after opening above Tuesday’s close.
- The FCA’s latest motor-finance letter shifted attention from scheme size to timing, with payouts now increasingly unlikely before 2027.
- Lloyds continues to buy back stock, but investors are watching whether litigation changes provisions or capital returns.
Lloyds Banking Group shares fell in London on Wednesday as investors weighed a fresh delay in the UK motor-finance compensation scheme against the bank’s ongoing share buyback. AJ Bell’s delayed feed showed Lloyds at 97.42p to sell and 97.46p to buy, down 0.74p, or 0.75%, after opening at 98.54p versus a previous close of 98.18p.
The immediate issue is no longer just how large the redress bill may be. Redress means compensation for customers treated unfairly. In March, the Financial Conduct Authority said 12.1 million motor-finance agreements made between 2007 and 2024 were eligible and estimated £7.5 billion would be paid if 75% of eligible consumers claimed. In a June 8 letter published by Parliament, FCA chief executive Nikhil Rathi said payouts are now “increasingly unlikely before 2027.” FCA
That matters for Lloyds because the bank has a meaningful UK motor-finance business. Its first-quarter statement showed UK Motor Finance balances of £16.8 billion at March 31, up from £15.8 billion a year earlier, and the bank said there had been no change to its provision for motor-finance commission arrangements after the FCA’s final rules. It still flagged uncertainties, including response rates, operational costs, litigation and challenges from other parties.
Lloyds is not one of the parties challenging the scheme. Rathi’s letter identified Volkswagen Financial Services UK, Mercedes-Benz Financial Services UK, Crédit Agricole Auto Finance and Consumer Voice as challengers, and said no UK or international bank had challenged, though CAAF is owned by an EU bank. Reuters separately reported that most of the industry, including Lloyds, Barclays, Santander and Close Brothers, had not opposed the scheme.
The wrinkle for investors is that delay can still cost money. The FCA said firms must keep preparing financially and operationally in case the scheme does not proceed, and that they must hold enough UK capital and make proper provisions for possible liabilities. That keeps the issue alive for Lloyds even without a direct legal challenge.
There is also a possible faster route. Rathi told the Treasury Committee that some firms are exploring whether they can make settlement offers now on complaints that would have been handled under the scheme, including cases where commission arrangements were not properly disclosed. The FCA did not name those firms.
At the same time, Lloyds is still returning capital. The bank said it bought 5 million ordinary shares on June 9 through Goldman Sachs International at a volume-weighted average price of 99.8793p, with the shares to be cancelled. A buyback is when a company repurchases its own shares; cancellation reduces the share count, which can support per-share earnings, though it does not guarantee a higher share price.
That buyback price now sits above Wednesday’s quoted level. For bulls, the cancellation programme is part of the reason to own the stock. For cautious investors, the comparison is awkward: the bank is shrinking its share base while a long-running conduct issue still has no settled cash timetable.
The underlying earnings picture remains stronger than the legal noise suggests. Lloyds reported first-quarter statutory profit before tax of £2.025 billion, up 33% from a year earlier, while net interest income — the difference between what a bank earns on loans and pays on deposits — rose 9% to £3.483 billion on a statutory basis.
The bank also guided for underlying net interest income above £14.9 billion in 2026 and return on tangible equity above 16%. Return on tangible equity is a profitability measure that compares earnings with shareholders’ tangible capital. Chief Executive Charlie Nunn said in the first-quarter statement: “We are confident in our delivery for the year ahead and reiterate our guidance for 2026.” Lloyds Banking Group Lloyds Banking Group
Analyst expectations still point above the current share price, though that is not the same as a near-term catalyst. Investors Chronicle data showed 15 analysts with a median 12-month target of 123p, a high estimate of 130p and a low of 91p, compared with a last price of 98.18p on that feed.
The downside case is that the tribunal process drags on and forces lenders to plan for several outcomes at once. The FCA said if the current scheme is struck down, it could need to consult again or move to a complaints-led approach through the Financial Ombudsman Service and courts; it estimated that path could cost lenders more than £6 billion extra and take three years to resolve claims. For Lloyds, that could mean higher costs, delayed certainty and less room for extra distributions if provisions have to move.
The next scheduled test is July 30, when Lloyds is due to publish half-year results and its new strategy. The bank has said it intends to consider additional capital distributions, on top of the ordinary dividend, twice a year starting in mid-2026; investors will be looking for whether motor finance uncertainty changes that ambition.
