Lloyds has set aside a further £700m for potential costs associated with motor finance Commission payments which will be heard in the Supreme Court in April.
This brings the total set aside to £1.15bn, including the £450m set aside in 2023. Lloyds set there was a lot of uncertainty surround the amount to be paid. In its annual results, it said:
“In the fourth quarter we took an additional £700m provision for the potential remediation costs relating to motor finance commission arrangements.
This is in light of the Court of Appeal judgment on Wrench, Johnson and Hopcraft that goes beyond the scope of the original FCA motor finance commissions review. The provision reflects a probability weighted scenario-based methodology incorporating a number of inputs. Clearly significant uncertainty remains around the final financial impact. In this context we welcome the expedited Supreme Court hearing at the beginning of April.
The total £1,150 million provision, including £450 million provided in 2023, represents the Group’s best estimate of the potential impact, including both redress and operational costs, but notes that there is a significant level of uncertainty in terms of the final outcome. As a result, the final financial impact could differ materially to the amount provided.”
