No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Lloyds Bank on Thursday said it would stick with its 1.95bn compensation provision to pay customers who were miss-sold motor finance after assessing the regulator's final ruling.
However, the lender warned there were still a number of uncertainties, including response rates, operational costs and any litigation.
"The ultimate outcome may also differ dependent upon potential actions by various parties, including legal proceedings and complaints. The group remains committed to ensuring customers receive appropriate and timely redress," it added.
The Financial Conduct Authority earlier this week said millions of drivers would be entitled to a higher-than-expected average of 830 in compensation. Lloyds has made a 1.95bn provision to cover redress, while rival Barclays had set aside 325m and Close Brothers 300m.
More than 12 million agreements made between 2007 and 2024 are now eligible for compensation, down from 14.2m announced in October, but the average payout was increased from 695.
The FCA estimated that 75% of eligible consumers will make a claim, which would take the total redress paid to 7.5bn.
Drivers will only be compensated if they were not told clearly either that their dealer or broker set the interest rate to earn more commission, the commission was high (at least 39% of the total cost of credit and 10% of the loan), or the dealer or broker was using one lender or gave one lender the right of first refusal - a so-called tied arrangement.
The FCA said lenders will have three months from the end of the implementation period to inform complainants whether they're owed compensation and how much. This means that people who have already complained or who complain before the end of the relevant implementation period will be compensated sooner.
Lenders will only contact people who haven't complained if they are likely to be owed money.
Reporting by Frank Prenesti for Sharecast.com
See the latest RNS on Investegate
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.