Carmakers face £5bn bill to cover payouts to finance scandal victims

Carmakers are braced to make big payouts to victims of the motor finance scandal - potentially half of an £11bn compensation bill.

- Kalyeena Makortoff Banking correspondent

The Financial Conduct Authority has estimated that “captive lenders” - the sections of carmakers that issue loans to buyers - will have to cover 47% of the total, roughly £5.2bn.

The size of the exposure of companies ranging from BMW to Hyundai has surprised experts because lenders including Lloyds, Santander, Barclays and specialists such as Close Brothers had been expected to bear the brunt of the costs.

Banks are likely to account for 51% of the payouts, with independent lenders making up the remaining 2%, the FCA said.