LONDON, June 30, 2026, 18:01 (BST)
- Motor-finance omnibus claims can go forward after Court of Appeal decision
- FCA has put June 30 scheme duties on hold as legal challenges continue
- Scheme figures suggest around 9.1 million claims are likely, with non-redress costs of £1.6 billion.
UK appeal court judges on Tuesday cleared the way for mass motor-finance claims to continue, while the Financial Conduct Authority’s planned redress scheme missed its June 30 start. The court threw out an appeal from lenders including Black Horse, a Lloyds Banking Group plc (LON:LLOY) unit, who had tried to block lawyers from bringing group actions for thousands of car buyers, the Financial Times said. The FCA said last week it won’t force firms to send letters to customers, pay claims, or file reports under the timetable, since the court fight is ongoing.
Investors now see more than the £7.5 billion refund pool as the key issue. It’s about whether lenders can still process millions of cases through a lower-cost mass scheme while court cases continue.
The FCA says 12.1 million agreements from 2007 to 2024 qualify for the processing plan. The regulator expects about 75% of eligible consumers will claim. The average payout is set at around £830. The overall cost comes to £9.1 billion, including £1.6 billion in non-redress expenses. The FCA warned that if complaints are handled via the ombudsman or courts instead, it could push lender costs up by more than £6 billion. “The scheme will put £7.5 billion back into people’s pockets,” said FCA Chief Executive Nikhil Rathi. “Payouts should not be delayed any longer.” FCA
| FCA scheme measure | Published figure | Investor read-through |
|---|---|---|
| Eligible motor-finance agreements | 12.1 million | Big data job for records |
| Expected claimant take-up | 75% | Roughly 9.1 million claims likely |
| Estimated redress | £7.5 billion | Works out to about £826 per claim |
| Total estimated bill | £9.1 billion | £1.6 billion over redress |
| Extra cost without scheme | More than £6 billion | Non-redress element about 3.8x bigger |
The FCA is worried some firms aren’t prepared for the job ahead. According to City AM, the regulator told more than 100 firms it was “very concerned” about how ready they are. Toby Hall, FCA director of scheme supervision, said: “While there is ongoing legal uncertainty, firms should continue preparing for all scenarios. Consumers and markets need confidence that, whatever the outcome, complaints will be handled consistently, efficiently and fairly.” City AM
The legal fight is playing out on two fronts. The Court of Appeal decision means bulk claims brought by claimant lawyers are still possible. Meanwhile, the FCA said it’s facing challenges from Consumer Voice, Volkswagen Financial Services (part of Volkswagen AG (ETR:VOW3)), Mercedes-Benz Financial Services (part of Mercedes-Benz Group AG (ETR:MBG)), and Crédit Agricole Auto Finance (owned by Crédit Agricole SA (EPA:ACA)). The regulator said these legal moves have thrown uncertainty over millions of customers and the UK’s second-biggest consumer-credit market, which saw £39 billion borrowed in 2024.
Volkswagen Financial Services UK said in April it backed redress for customers who really lost out but said any redress plan had to be “lawful, fair and properly targeted.” Reuters said at the time Mercedes-Benz Group AG and Volkswagen AG were among four firms pushing back on the FCA scheme. BMW AG (ETR:BMW) said then it did not agree with every part of the plan but called the FCA approach the quickest and simplest fix for the issue. Reuters
London stocks had closed by the time data was released. Lloyds ended up 2.11% at 111.45p to 111.50p, while Close Brothers Group plc (LON:CBG) dropped 3.94% to 406.40p/407.40p. Lloyds’ market cap stood at £64.65 billion, Close Brothers at £610.65 million. Lloyds reported a £1.95 billion motor-finance provision. Close Brothers put its redress bill at around £320 million.
| Listed lender | Market check | Motor-finance provision or estimate | Share of market value |
|---|---|---|---|
| Lloyds Banking Group plc (LON:LLOY) | Shares rose 2.11%. Market cap at £64.65 bln | Provision stands at £1.95 bln | Near 3% |
| Close Brothers Group plc (LON:CBG) | Shares slid 3.94%. Market cap at £610.65 mln | Estimate is roughly £320 mln | Around 52% |
The split means the same redress scheme counts as a capital hit for some lenders and as an equity move for others. Close Brothers feels the impact more since its provision is big compared to its market value. Lloyds faces a bigger bill, but its market cap can take the charge.
Barclays PLC (LON:BARC) and Santander UK, part of Banco Santander SA (BME:SAN), were also listed by City AM as banks with exposure. For investors, the new risk is legal cases and the FCA scheme moving forward together, with lenders still told to keep digging up historic deals, commission files and broker logs while the regulator holds for court steps.
