Published by Global Banking & Finance Review®
Posted on April 10, 2026
2 min readLast updated: April 10, 2026
Add as preferred source on GoogleLloyds Banking Group has decided not to pursue legal action against the FCA’s £9.1 billion motor finance redress scheme, opting to move forward for the benefit of customers and shareholders despite disagreeing with the regulator’s conclusions.
April 10 (Reuters) - Lloyds Banking Group will not launch a legal challenge against the UK financial regulator's 9.1 billion pound ($12.25 billion) compensation scheme for consumers who were allegedly mis-sold car finance, the Financial Times reported on Friday.
The development comes as banks and vehicle manufacturers with finance divisions, which have collectively set aside billions of pounds for compensation, review whether they need to adjust their provisions or legally challenge the scheme.
The Financial Conduct Authority (FCA) last month told the country's motor finance industry to compensate motorists after inadequately disclosing commissions and contractual ties between lenders and car dealerships over a 17-year period until 2024.
"We have carefully considered the FCA motor finance redress scheme. While we remain disappointed in and disagree with its conclusions, we believe that moving forward with the scheme is now the right step for our customers and shareholders," a Lloyds spokesperson said in an emailed statement.
Lloyds had previously considered mounting a legal challenge against the scheme as it believed the regulator did not adhere to court judgments, FT reported.
The final headline bill was trimmed from the FCA's original 11 billion pound estimate after the regulator reduced forecasts for administrative costs, adjusted eligibility criteria and lowered forecasts for motorist participation.
($1 = 0.7427 pound)
(Reporting by Preetika Parashuraman in Bengaluru and Mrinmay Dey in Mexico City; Editing by Shreya Biswas)
Lloyds decided not to pursue legal action and will move forward with the FCA scheme for the benefit of customers and shareholders.
The UK car finance compensation scheme is valued at £9.1 billion, down from the original estimate of £11 billion.
The FCA found inadequate disclosure of commissions and contractual ties between lenders and car dealerships over a 17-year period.
The FCA's investigation and compensation scheme covers car finance sold over 17 years, up to and including 2024.
Yes, Lloyds had previously considered mounting a legal challenge but ultimately decided against it.
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