Thu, 20 Feb 2025

Thu, 20 Feb 2025 Lloyds sets aside £1.2bn for car loan mis-selling payouts

The banking group has nearly tripled the amount it is setting aside, knocking its profits for the year.

* Lloyds Banking Group has increased its provision for car finance mis-selling compensation to £1.2bn, triple the initial amount.
* The bank has put aside an extra £700m on top of the initial £450m earmarked earlier.
* The mis-selling scandal involves not being clear enough about commission paid to car dealers, potentially affecting millions of motorists who may be eligible for compensation.
* Group chief executive Charlie Nunn said the provision is the bank's "best guess at this stage" and that the overall performance was strong despite profits dropping from £7.5bn to £5.97bn.
* The Supreme Court will rule on the question of whether people taking out car loans were properly informed about commission payments in April.
* About two million new and second-hand cars are sold using finance agreements every year, with customers paying an initial deposit and a monthly fee including interest.
* Lloyds faces a potential hefty bill due to its largest exposure among major UK banks, although the outcome remains uncertain.
* Other banks such as Barclays (£90m) and Santander (£295m) have also made provisions for motor finance compensation.
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