London, April 6, 2026, 12:11 BST
Lloyds Banking Group is sticking with its £1.95 billion motor finance provision, following a review of Britain’s final compensation rules. For now, the bank says it sees no need for an adjustment. Any update on that front will have to wait until Lloyds’ first-quarter statement later this month.
Lloyds, which owns Black Horse—the UK’s top motor finance lender—is back in the spotlight, with two key dates for investors looming. The shares go ex-dividend April 9, and the Q1 interim management statement lands April 29. London trading takes a break for Easter Monday, so last Thursday’s statement remains the freshest official word from the bank’s top brass.
The scandal involves undisclosed commissions and various commercial arrangements between lenders and dealers that borrowers weren’t told about. According to the Financial Conduct Authority, the final compensation scheme will apply to 12.1 million agreements stretching from April 2007 through November 2024. The regulator expects firms to pay around £7.5 billion in redress, with the overall cost projected at £9.1 billion—lower than the £11 billion estimated during the consultation phase.
Lloyds flagged ongoing uncertainty around response rates, operating expenses and lawsuits, warning that the final impact hinges on future legal action and complaints. The bank plans another update when it reports first-quarter results at April’s end.
Analysts were divided over the flat reserve. Hargreaves Lansdown’s Derren Nathan suggested Lloyds might be overcautious, potentially freeing up £400 million down the line. Over at RBC, equity analyst Benjamin Toms flagged a “highly likely” court review of the scheme. City AM
Barclays and Close Brothers also landed in the group of lenders dealing with the fallout. Following the FCA decision, Reuters noted that several firms were still deciding if they should tweak their provisions or fight the scheme. Close Brothers, for its part, said it was reviewing what the ruling could mean.
Lloyds’ reserve issue slices into the capital narrative the bank’s been pitching. Back in January, it posted 2025 pretax profit of £6.7 billion, raised its return on tangible equity target for 2026 to more than 16%, and rolled out a £1.75 billion buyback.
The downside risk still lingers. On March 27, Reuters reported that Lloyds faces a lawsuit from over 30,000 consumers demanding £66 million related to mis-sold car loans. The FCA, for its part, divided its compensation plan into pre-2014 and post-2014 tracks, aiming in part to prevent lawsuits from stalling payouts across the board.
Lloyds isn’t budging on its £1.95 billion reserve—that’s the word for now. With London’s markets closed Monday and no fresh company news due until April 29, investors are left hanging. The real question: did the bank overestimate, underestimate, or nail the amount set aside for one of the UK’s largest consumer finance shakeups?
