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RNS Number : 8013T  Lloyds Banking Group PLC  04 August 2025

 

4 August 2025

 

MOTOR FINANCE UPDATE

 

Further to the Supreme Court's judgment on the appeal against the Court of
Appeal's decision in Wrench, Johnson and Hopcraft, which was handed down last
Friday (1 August 2025), the Group has undertaken an initial assessment of the
impact of the judgment.

 

The judgment overturned the Court of Appeal's decision in relation to
fiduciary duties and bribery by determining that motor dealers acting as
credit brokers do not owe fiduciary duties to their customers and that the
payment of commission in this context could not constitute a bribe. In one of
the cases before it (Johnson), the Supreme Court considered whether an unfair
relationship had arisen between the lender and the borrower for the purposes
of the Consumer Credit Act 1974. The Supreme Court confirmed that the test for
unfairness was highly fact-sensitive and required consideration of all
relevant matters. It determined that there was unfairness in the case of Mr
Johnson and awarded a refund of the commission paid plus interest at a
commercial rate to remedy that unfairness.

 

As previously stated, in establishing the existing provision the Group created
a range of scenarios to address uncertainties around a number of key
assumptions. These included a range of potential Supreme Court outcomes,
regulatory responses and outcomes in relation to redress. Whilst the judgment
announced on 1 August provides additional clarity, there remain a number of
uncertainties that the Group continues to consider in its approach to
provisioning. The Group's approach therefore continues to include the
assessment of multiple scenarios. The FCA announced yesterday that it will
publish a consultation on an industry wide redress scheme by early October.
The FCA will propose that the scheme covers discretionary commission
arrangements (DCA) and will consult on which non-DCA arrangements should be
included. The FCA outlined certain other factors on which they will consult.
The ultimate impact on the Group will be determined by a number of factors
still to be resolved, in particular the outcome of the FCA consultation and
any further interventions as well as any broader implications of the judgment,
including legal proceedings and complaints.

 

After initial assessment of the Supreme Court judgment, and pending resolution
of the outstanding uncertainties, in particular the FCA redress scheme, the
Group currently believes that if there is any change to the provision it is
unlikely to be material in the context of the Group. The provision will
continue to be reviewed for any further information that becomes available,
with an update provided as and when necessary.

 

As stated in the recent half year results, the Group has continued to perform
in line with guidance. The Group delivered sustained strength in financial
performance with continued income growth, cost control, resilient asset
quality and strong capital generation of 86bps in the first half of 2025.

 

-END-

 

For further information:

 

Investor Relations

Douglas
Radcliffe
+44 (0)20 7356 1571

Group Investor Relations Director

douglas.radcliffe@lloydsbanking.com

 

Corporate Affairs

Matt Smith
 
+44 (0)77 8835 2487

Head of Media Relations

matt.smith@lloydsbanking.com

 

 

 

FORWARD LOOKING STATEMENTS

 

This document contains certain forward-looking statements within the meaning
of Section 21E of the US Securities Exchange Act of 1934, as amended, and
section 27A of the US Securities Act of 1933, as amended, with respect to the
business, strategy, plans and/or results of Lloyds Banking Group plc together
with its subsidiaries (the Group) and its current goals and expectations.
Statements that are not historical or current facts, including statements
about the Group's or its directors' and/or management's beliefs and
expectations, are forward-looking statements.

Words such as, without limitation, 'believes', 'achieves', 'anticipates',
'estimates', 'expects', 'targets', 'should', 'intends', 'aims', 'projects',
'plans', 'potential', 'will', 'would', 'could', 'considered', 'likely', 'may',
'seek', 'estimate', 'probability', 'goal', 'objective', 'deliver',
'endeavour', 'prospects', 'optimistic' and similar expressions or variations
on these expressions are intended to identify forward-looking statements.
These statements concern or may affect future matters, including but not
limited to: projections or expectations of the Group's future financial
position, including profit attributable to shareholders, provisions, economic
profit, dividends, capital structure, portfolios, net interest margin, capital
ratios, liquidity, risk-weighted assets (RWAs), expenditures or any other
financial items or ratios; litigation, regulatory and governmental
investigations; the Group's future financial performance; the level and extent
of future impairments and write-downs; the Group's ESG targets and/or
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management and other statements that are not historical fact and statements of
assumptions underlying such statements. By their nature, forward-looking
statements involve risk and uncertainty because they relate to events and
depend upon circumstances that will or may occur in the future.

Factors that could cause actual business, strategy, targets, plans and/or
results (including but not limited to the payment of dividends) to differ
materially from forward-looking statements include, but are not limited to:
general economic and business conditions in the UK and internationally
(including in relation to tariffs); imposed and threatened tariffs and changes
to global trade policies; acts of hostility or terrorism and responses to
those acts, or other such events; geopolitical unpredictability; the war
between Russia and Ukraine; the escalation of conflicts in the Middle East;
the tensions between China and Taiwan; political instability including as a
result of any UK general election; market related risks, trends and
developments; changes in client and consumer behaviour and demand; exposure to
counterparty risk; the ability to access sufficient sources of capital,
liquidity and funding when required; changes to the Group's credit ratings;
fluctuations in interest rates, inflation, exchange rates, stock markets and
currencies; volatility in credit markets; volatility in the price of the
Group's securities; natural pandemic and other disasters; risks concerning
borrower and counterparty credit quality; risks affecting insurance business
and defined benefit

pension schemes; changes in laws, regulations, practices and accounting
standards or taxation; changes to regulatory capital or liquidity requirements
and similar contingencies; the policies and actions of governmental or
regulatory authorities or courts together with any resulting impact on the
future structure of the Group; risks associated with the Group's compliance
with a wide range of laws and regulations; assessment related to resolution
planning requirements; risks related to regulatory actions which may be taken
in the event of a bank or Group failure; exposure to legal, regulatory or
competition proceedings, investigations or complaints; failure to comply with
anti-money laundering, counter terrorist financing, anti-bribery and sanctions
regulations; failure to prevent or detect any illegal or improper activities;
operational risks including risks as a result of the failure of third party
suppliers; conduct risk; technological changes and risks to the security of IT
and operational infrastructure, systems, data and information resulting from
increased threat of cyber and other attacks; technological failure; inadequate
or failed internal or external processes or systems; risks relating to ESG
matters, such as climate change (and achieving climate change ambitions) and
decarbonisation, including the Group's ability along with the government and
other stakeholders to measure, manage and mitigate the impacts of climate
change effectively, and human rights issues; the impact of competitive
conditions; failure to attract, retain and develop high calibre talent; the
ability to achieve strategic objectives; the ability to derive cost savings
and other benefits including, but without limitation, as a result of any
acquisitions, disposals and other strategic transactions; inability to capture
accurately the expected value from acquisitions; assumptions and estimates
that form the basis of the Group's financial statements; and potential changes
in dividend policy. A number of these influences and factors are beyond the
Group's control. Please refer to the latest Annual Report on Form 20-F filed
by Lloyds Banking Group plc with the US Securities and Exchange Commission
(the SEC), which is available on the SEC's website at www.sec.gov, for a
discussion of certain factors and risks. Lloyds Banking Group plc may also
make or disclose written and/or oral forward-looking statements in other
written materials and in oral statements made by the directors, officers or
employees of Lloyds Banking Group plc to third parties, including financial
analysts. Except as required by any applicable law or regulation, the
forward-looking statements contained in this document are made as of today's
date, and the Group expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained in this document whether as a result of new information, future
events or otherwise. The information, statements and opinions contained in
this document do not constitute a public offer under any applicable law or an
offer to sell any securities or financial instruments or any advice or
recommendation with respect to such securities or financial instruments.

 

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