Source: Sharecast
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
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