- Lloyds Banking Group
- 31 March 2026 07:33:20
Source: Sharecast
The Financial Conduct Authority 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.
“The details of the final scheme differ from the scheme as laid out in October 2025 and require careful analysis. Accordingly, the group is assessing the implications and impact of the final rules. The group will update the market as and when appropriate,” Lloyds said in a short statement on Tuesday.
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.
FCA chief executive Nikhil Rathi on Monday said: "We’ve listened to feedback to make sure the scheme is fair for consumers and proportionate for firms. It will put £7.5 billion back into people’s pockets.
"Now we need everyone to get behind it and ensure millions get their money this year. Payouts should not be delayed any longer, especially as household bills come under greater pressure. Delivering compensation promptly also gives lenders the chance to rebuild trust and means we can draw a line under the past and support a healthy motor finance market for the future."
Reporting by Frank Prenesti and Michele Maatouk for Sharecast.com
