Lloyds Banking Group has set aside a further £800 million to cover claims from the mis-selling of motor finance deals.
It adds to an existing provision of £1.15 billion and follows the recent announcement by the Financial Conduct Authority on an industry wide redress scheme in response to the Supreme Court judgment on 1 August.
Lloyds said the additional charge “reflects the increased likelihood of a higher number of historical cases.”
It adds: “The group remains committed to ensuring customers receive appropriate redress where they suffered loss, however the group does not believe that the proposed redress methodology outlined in the consultation document reflects the actual loss to the customer.
“Nor does it meet the objective of ensuring that consumers are compensated proportionately and reasonably where harm has been demonstrated. In addition, the approach to unfairness in the redress scheme does not align with the legal clarity provided by the recent Supreme Court judgment in Johnson, in which unfairness was assessed on a fact specific basis and against a non-exhaustive list of multiple factors. The group will make representations to the FCA accordingly.
“The current FCA proposals remain a consultation and the ultimate outcome may evolve in response to representations made by various parties as well as further legal proceedings and complaints or any other broader implications of the Supreme Court judgment. However, the total £1.95 billion provision, including both redress and operational costs, represents the group’s best estimate of the potential impact of the motor finance issue.”
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