Jurisdiction(s):
United Kingdom

Lloyds questions FCA’s UK motor finance redress scheme post-Johnson v FirstRand; £1.95bn provision; potential claims back to 2007; senior manager enforcement risk

Published on: 16 October 2025

Published by a Law360 reporter

Legal News

Article summary

Lloyds Banking Group Plc has earmarked £1.95bn following the FCA’s latest consultation, which may broaden the pool of qualifying customers and significantly reshape how compensation is calculated. Under the FCA’s provisional methodology, millions of motor finance agreements dating back to 2007 could be eligible for redress where discretionary commission arrangements were used, enabling dealers to sway interest rates to enhance their commissions. However, Lloyds Bank, a constituent of London’s FTSE 100 index, has voiced serious concerns over the fairness and lawfulness of the FCA’s suggested remedy. The bank contends it cannot see how the regulator’s proposed approach, as currently framed, aligns with the UK Supreme Court’s decision in Johnson v FirstRand Bank Ltd. The justices clarified in August 2025 what amounts to an ‘unfair’ relationship, and, it says, this is not consistent with that clarification...

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