Lloyds issues major car finance scandal update that could see drivers handed £1,100
Lloyds is "assessing" the impact of a landmark court ruling on car loans. The lender holds about £15bn in loans through Black Horse and could have to pay compensation for mis-selling afer a landmark court ruling over car finance mis-selling on Friday.
The ruling could theoretically lead to lenders paying out billions of pounds in compensation to borrowers. Lloyds said it would update the market “if and as appropriate”. Those who bought a car, motorbike or van on finance before January 28, 2021, could be owed potentially thousands of pounds.
The FCA is in the process of finding out how many motorists have been affected and what compensation customers will receive. “This sets a higher bar for the disclosure of and consent to the existence, nature, and quantum of any commission paid than had been understood to be required or applied across the motor finance industry prior to the decision,” Lloyds said in its statement on Monday morning.
READ MORE Met Office says snow could hit UK within days and explains where's set for flurries
The bank also said the court’s decisions about disclosure “go beyond the scope of the current FCA [Financial Conduct Authority] motor commissions review”. “The group is assessing the potential impact of the decisions, as well as any broader implications, pending the outcome of the appeal applications.”
after newsletter promotion
Danni Hewson, the head of financial analysis at AJ Bell, said Lloyds was clearly in “damage control mode” and that “any glow from Lloyds’ better-than-expected quarterly numbers last week has well and truly disappeared”. “This will increase nervousness ahead of the FCA’s own probe into the issue and potentially prolong the agony for Lloyds and the other names affected,” Hewson added.
“If the regulator does adopt a wider lens thanks to this latest ruling then the results of its investigation may well come in later than May, which was when a judgment had been expected.” On Friday in an "unexpected" decision in one of the motor finance test cases, a court has sided with drivers against the banks and lenders. The Court of Appeal ruled that a broker could not lawfully receive a commission from the lender without obtaining the customer’s fully informed consent to the payment.
Martin Lewis has previously estimated compensation payouts of £1,100 could be issued.