Lloyds sticks with PS2 billion motor finance provision
Lloyds Banking Group PLC on Thursday said it won’t up its motor finance provision, after a UK watchdog announced a redress scheme to end the saga.
The lender, whose existing provision stands at £1.95 billion, said it has ‘undertaken an assessment of the implications and impact of the final rules’.
‘Further to this analysis the group does not currently believe any change to the provision for this issue is required,’ Lloyds said.
The Financial Conduct Authority on Monday confirmed it will proceed with an industry-wide motor finance redress scheme, aiming to compensate millions of customers.
The regulator estimated around 12.1 million agreements will be eligible for redress, down from 14.2 million proposed at the consultation stage, after tightening eligibility criteria.
The scheme is expected to see firms pay out around £7.5 billion in compensation, with total costs including administration estimated at £9.1 billion. This is lower than earlier projections of up to £11 billion.
Lloyds noted some uncertainties remain, stemming from response rates, litigation or any operational costs.
‘The ultimate outcome may also differ dependent upon potential actions by various parties, including legal proceedings and complaints. An update will be provided as appropriate with the first quarter results at the end of April,’ it said.
Lloyds announces first quarter results on April 29.
Shares traded 1.6% lower at 96.18 pence each in London on Thursday morning, but is up over 5% so far this week.
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