Lloyds sets aside £450m for car loan compensation

LLOYDS BANK today set aside £450 million to cover the possible costs of a probe by the City watchdog into commission payments on car loans.

- Simon English

The Financial Conduct Authority is going back over loans up to 10 years old to see if consumers were overcharged in what some have said could be the next PPI mis-selling scandal.

Replicated across the industry, that £450 million from the UK’s biggest bank would turn into many billions in compensation payments.

Lloyds CEO Charlie Nunn said: “There remains significant uncertainty as to the extent of any misconduct and customer loss, if any, the nature of any remediation action, if required, and its timing. Hence the impact could materially differ from the provision, both higher or lower.”

Lloyds owns one of the largest motor finance firms, Black Horse.

Matt Britzman at Hargreaves Lansdown said the £450 million set aside was “less than some had feared but there will be question marks around how Lloyds has come to that figure”.