11:23 am, April 7, 2026
Lloyds Banking Group is sticking to its £1.95bn provision to compensate victims of the car finance scandal, despite the FCA confirming changes to the redress scheme.
Car Dealer reported last week that the UK’s financial watchdog had finalised its final rules on who will be due compensation for being mis-sold vehicle finance.
The scheme is likely to be worth a staggering £7.5bn – although some experts put the figure at closer to £9bn – with customers getting an average payout in the region of £830.
Lloyds had already ring fenced the most money of any major bank to handle the crisis and says it does not believe any change is necessary
In a statement issued today, the banking giant said it had assessed the scheme and ‘does not currently believe any change to the provision for this issue is required’.
However, bosses have added that there ‘remain a number of uncertainties’ including the rate of customer responses, operational costs and any legal proceedings.
Lloyds is also set for legal action from law firm Courmacs Legal, which is expected to file a claim on behalf of around 30,000 car loan customers, seeking some £66m in damages.
It would represent a major legal challenge to the lender’s Black Horse motor finance brand, outside of the FCA’s scheme.
The regulator has repeatedly said consumers do not need to use lawyers or claims management firms to complain, warning that they risk losing more than 30% of their compensation as a result of fees.
It has set up the free scheme to compensate people who were treated unfairly when they took out a motor finance agreement between April 2007 and November 2024.
Most of the deals covered involve so-called discretionary commission arrangements (DCAs), which were banned in 2021.
This refers to arrangements whereby brokers, including car dealers, were able to increase interest rates on car loans so they could get more commission.
The FCA said this led to unfairness for customers who were not properly informed about the arrangement and therefore did not have the opportunity to negotiate or find themselves a better deal.
