Factbox: UK lenders raise motor finance mis-selling provisions

Close Brothers

20/10/2025 11:56

In Oct 20 story, corrects second-last paragraph to show Santander UK's provision was 295 million pounds, not 293 million pounds

Oct 20 (Reuters) - Britain's Financial Conduct Authority this month estimated that the motor finance industry would need to compensate consumers between 8.2 billion pounds and 9.7 billion pounds ($11 billion and $13 billion) due to car loans with undisclosed commissions.

Although the FCA's compensation estimates came in lower than the earlier projections, some UK lenders have increased their provisions to align with the proposed redress scheme, while others have not updated their estimates yet since the October 7 consultation.

Here is the list of companies that have announced significant increases to their existing financial provisions:

LENDER
PROVISION SET EARLIER
TOTAL PROVISION AFTER REVISION
% CHANGE
IMPACT
Lloyds Banking GroupLLOY.L
1.15 billion pounds
1.95 billion pounds
69.6%
Close BrothersCBRO.L
165 million pounds
About 300 million pounds
81.8%
Additional provision to reduce CET1 capital ratio by about 130 basis points on a pro-forma basis as of July 31
Bank Of IrelandBIRG.I
143 million pounds
About 350 million pounds
144.8%
Additional provision to reduce CET1 ratio of 16.0% by about 35 basis points as of June 30.
Secure Trust BankSTBS.L
5.5 million pounds
21 million pounds
281.8%
Additional provisions to reduce CET1 ratio by about 50 basis points to 12.8% as of September 30.

Last year, Barclays BARC.L disclosed a provision of 90 million pounds through its subsidiary Clydesdale Financial Services Limited, and the UK arm of Santander SAN.MC announced a provision of 295 million pounds to cover compensation.

The two have not yet announced any additional provisions following the FCA's latest proposals on the compensation scheme.

(Sources: Reuters stories, company annual reports and press releases)

($1 = 0.7451 pounds)

 (Reporting by Ankita Bora and Nithyashree R B in Bengaluru; Editing by Vijay Kishore)

 ((Ankita.Bora@thomsonreuters.com;))