Lloyds Banking Group announced on Monday that it will take an additional charge of £800 million ($1.1 billion) to compensate customers affected by the motor finance mis-selling scandal, increasing its total provision to £1.95 billion.
The lender, one of the UK’s largest players in the motor finance market, had previously allocated around £1.15 billion for the issue, which has become one of the most expensive consumer scandals in British banking history.
Lloyds said the Financial Conduct Authority’s (FCA) proposed redress scheme indicated that more historical cases dating back to 2007 could now qualify for compensation. The bank also noted it plans to challenge the regulator’s methodology, arguing that the FCA’s approach to calculating redress appeared “less closely linked to actual customer loss than previously anticipated,” potentially leading to higher payouts than originally expected.
Despite the additional charge, Lloyds’ shares rose 1.6% in early London trading, rebounding after last week’s decline when the bank had warned of a potential “material” increase in provisions.
