Lloyds Banking Group has upped its pay-out provision for the motor finance commission redress scheme.
It had previously set aside £1.15bn for customers but has added another £800m to cater for what it sees as a larger number of cases on its books.
Close Brothers has also added another £135m to its provision bring its total to £300m following the publication of the FCA consultation paper.
In a statement Lloyds said: “Based on the FCA proposals in their current form, the potential impact is at the adverse end of the range of previous expected outcomes.
“The proposals are subject to consultation and there remain a number of uncertainties.
“Accordingly, the group’s approach continues to consider a probability weighted outcome considering a range of scenarios, including scenarios that represent sensitivities to the FCAs current proposals, and intends to take an additional charge of £800 million.
“The current FCA proposals remain a consultation and the ultimate outcome may evolve in response to representations made by various parties as well as further legal proceedings and complaints or any other broader implications of the Supreme Court judgment.
“However, the total £1.95bn provision, including both redress and operational costs, represents the Group’s best estimate of the potential impact of the motor finance issue.”
Close Brothers said in a statement: “While uncertainty in relation to the outcome of the consultation remains, the group has updated its range of probability-weighted scenarios resulting in an additional expected charge of around £135 million, increasing the total provision to approximately £300 million.
“This reflects a greater likelihood that more historical cases, particularly those involving Discretionary Commission Arrangements, would qualify for redress, as well as the possibility of the proposed redress methodology resulting in higher compensation levels than reflected in some of the group’s previous range of scenarios.”
