Overview
- Lloyds said its £1.2bn provision for car finance redress will likely need a material increase, while Close Brothers also expects a material uplift to its £165m reserve, sending both stocks lower.
- The FCA estimates £8.2bn in consumer redress rising to roughly £11bn including implementation costs, covering agreements from 6 April 2007 to 1 November 2024 where lender-paid commissions applied.
- Regulator analysis indicates banks would shoulder about 51% of payouts and captive carmaker finance arms about 47% (circa £5.2bn), with some captives already disclosing initial ringfences such as BMW Financial (£200m), Honda Finance Europe (£62.2m) and Hyundai Capital UK (£34.5m).
- The FCA plans a regulator-managed process with lenders contacting prior complainants within three months of launch and other customers within six months, with final rules expected early 2026 and payments later that year.
- Analysts estimate the industry has provisioned only around £2bn so far, highlighting a sizable gap that could force wider top-ups, as smaller players such as Secure Trust adjust guidance tied to motor finance performance.