London, March 30, 2026, 13:10 BST
Lloyds Banking Group came under fresh pressure on Monday after UK regulators launched a taskforce to crack down on motor finance claims firms, just hours before the Financial Conduct Authority is due to unveil final compensation rules. The bank also faces a reported 66 million pound lawsuit from more than 30,000 borrowers over allegedly mis-sold car loans. 1
The timing matters for Lloyds. It has already set aside 1.95 billion pounds for the scandal, while the FCA previously sketched an industry-wide bill of about 11 billion pounds, making this one of Britain’s costliest consumer finance disputes. What the watchdog says after the market closes on Monday will shape how much banks pay, how quickly customers are compensated and how much of the fight drifts into court. 2
The case turns on commissions paid by lenders to car dealers and other commercial ties that the FCA says were not properly disclosed and may have pushed up borrowing costs between 2007 and 2024. Redress, in this case, means compensation, and the watchdog has been preparing a scheme for millions of affected customers. 3
On Monday, the FCA, the Solicitors Regulation Authority, the Information Commissioner’s Office and the Advertising Standards Authority said they would share intelligence and act together against unsolicited marketing, misleading adverts, thin claims and unfair exit fees by claims management companies, or CMCs, which handle compensation cases for a fee, and by law firms. “Our scheme will be free and people don’t need to use a CMC or law firm,” Alison Walters, the FCA’s director of consumer finance and taskforce lead, said. 1
Reuters reported on Friday, citing the Financial Times, that Lloyds was bracing for a lawsuit seeking 66 million pounds in damages on behalf of more than 30,000 borrowers over mis-sold car loans. Reuters could not independently verify the report. 4
The pressure is wider than Lloyds. Santander, Barclays and Close Brothers are among lenders exposed to the FCA review, and Close Brothers has already said it will cut a fifth of its workforce by 2027. Industry sources told Reuters the final design could still draw legal challenges if the watchdog keeps a broad test for unfair loans and excessive commissions. 3
For Lloyds, the bill is not fixed. In its 2025 risk disclosures, the bank said final costs could differ materially from the amount already provided, depending on customer response rates, operating costs, further regulatory action and legal proceedings. It also said the Court of Appeal is due in April to consider whether multiple motor finance claims can be handled in a single group case. 2
There is another risk running alongside that. A Treasury Committee disclosure on Friday showed an IT glitch earlier this month exposed the personal data of up to 447,936 customers across Lloyds, Halifax and Bank of Scotland, and the bank has paid 139,000 pounds to 3,625 customers for distress and inconvenience. That does not change the car finance bill directly, but it adds to scrutiny of a lender already balancing legal, regulatory and operational pressure. 5
Lloyds said in its annual report last month that it had taken an additional 800 million pound motor finance provision and was still waiting for clarity on the final rules. Chief Executive Charlie Nunn said then the group remained “confident in meeting our 2026 commitments.” The next marker comes after the market closes on Monday, when the FCA is set to publish its final scheme. 6
