Lloyds Banking Group have signalled that they could face costs of up to £2 billion. This is the missed financial impact resulting from a car finance scandal that’s leaving millions of drivers out of pocket all over the UK. The deceit includes undisclosed commission payments made from 2007 to 2024, potentially making all affected customers eligible for damages. This proposed system would give consumers an open and easily navigable path to redress.
In a press statement, the Financial Conduct Authority (FCA) has been explicit that the scheme is aimed at drivers who have car finance agreements. Hidden into these agreements were commission fee kickbacks. These payments frequently meant consumers were charged more than necessary for their car loans, all without their knowledge. Lloyds has taken the extraordinary step of conceding the severity of what’s coming down the pipeline.
“Based on the FCA proposals in their current form, the potential impact is at the adverse end of the range of previous expected outcomes,” a spokesperson from Lloyds stated. This indicates that the bank is preparing for increasingly severe financial damage as it adjusts to the fallout from the scandal.
This gives us an estimated total cost of redress of £1.95 billion. Furthermore, £800 million has been earmarked for dealing with the anticipated wave of legacy claims to come. The bank is moving proactively. They expect additional customers to come forward and claim compensation as more individuals become aware of their eligibility.
Lloyds is putting £150m into the redress scheme. The interest rates on compensation payments will be significantly less than those levied at the height of the payment protection insurance (PPI) scandal. This factor would determine the degree of fiscal stress that the bank will face in the course of managing its liabilities.
The total compensation payout may come to about £8.2 billion. This jaw-dropping number serves to underline just how critical our situation truly is. Should consumers know their rights, that bank will be more called on to pay more claims for compensation.
