🔔 **Major Update from Lloyds: £700 Payouts on the Horizon!** 🔔
Lloyds Banking Group has updated its car finance compensation plans, revealing the potential costs could reach nearly £2 billion due to a mis-selling scandal. The developed scheme, proposed by the Financial Conduct Authority (FCA), covers around 14 million unfair car loans, with payouts averaging £700 each.
Lloyds is gearing up to challenge the FCA’s plan, arguing it overestimates the necessary compensation. The bank has set aside an extra £800 million, bumping its total provision to £1.95 billion to cover customer payouts and operational expenses.
The issue stems from historical motor finance agreements featuring discretionary commission arrangements (DCAs). These deals allowed brokers, like car dealers, to up interest rates to receive more commission—often leaving customers in the dark about better deals. While Lloyds is committed to fair compensation for affected customers, it claims the proposed methodology doesn’t accurately reflect the actual losses.
Despite Lloyds’ concerns, the FCA aims to ensure that all customers receive proportional and reasonable compensation. Exciting times ahead as the group prepares to make representations to the FCA, potentially impacting commission returns!
In other news, carmaker BMW is in talks with the Treasury to voice its own concerns regarding the industry-wide redress process.
Stay tuned for more updates on this evolving story! 💬📰