Lloyds Banking Group has announced it will take an additional charge of 800 million pounds in relation to the UK motor finance mis-selling scandal. This brings the bank’s total expected impact from the scandal to 1.95 billion pounds. Lloyds Banking Group is a British financial institution providing a wide range of banking and financial services. It operates through several divisions, offering services to personal and commercial customers.
The UK lender had previously allocated approximately 1.15 billion pounds to address the issue. The increased provision follows the Financial Conduct Authority’s (FCA) proposal for redress schemes. These schemes suggest that a greater number of historical cases, potentially dating back to 2007, are eligible for compensation.
Lloyds has indicated that the FCA’s approach to calculating redress is “less closely linked to actual customer loss than previously anticipated.” This suggests that the eventual payouts to affected customers may be higher than the bank’s initial projections. The FCA last week proposed a redress scheme for consumers with motor finance compensation claims, with estimated costs ranging from 8.2 billion to 9.7 billion pounds across the industry.
The rising costs associated with the motor finance mis-selling scandal continue to impact Lloyds Banking Group’s financial outlook. Investors and analysts will be closely monitoring the situation as the FCA’s redress scheme progresses and the full extent of the bank’s liabilities becomes clearer.
