Overview
- Lloyds added £800 million to its motor finance provision, taking it to £1.95 billion, and said the FCA’s proposed compensation formula overstates consumer loss and departs from the Supreme Court’s Johnson ruling.
- The FCA consultation proposes a regulator-run scheme for agreements from 6 April 2007 to 1 November 2024, covering about 14.2 million deals with average payouts around £700.
- The regulator’s modelling points to roughly £8.2 billion of redress in an average participation scenario, with reporting indicating total industry costs near £11 billion once operational expenses are included.
- Industry responses are mounting, with Close Brothers signaling its £165 million reserve is likely insufficient, Santander reviewing its position, BMW seeking talks with the Treasury, and the Finance and Leasing Association questioning the FCA’s assumptions.
- The FCA plans consumer outreach and lender contact timelines, urges people to claim directly rather than via claims firms, and estimates the burden split at around 51% for banks, 47% for manufacturer captives, and 2% for independents.