Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “The long-running motor finance saga took a step forward yesterday, with the FCA publishing the final details of its compensation scheme for customers overcharged on car loans.
“Encouragingly for investors, the expected total cost for lenders has fallen to £9.1billion from £11billion in the original consultation, after the regulator reduced likely claim volumes and ruled out payouts where no financial loss was suffered.
“Lloyds had already set aside £1.95billion, broadly in line with the more severe earlier proposal, meaning its provisions now look more than adequate under the final scheme.
“In simple terms, Lloyds may have set aside more than it needs and could release somewhere in the region of £400million over time, a modest but welcome boost to profits.
“Lloyds is reviewing the details, but at first glance, this looks like a better-than-feared outcome for investors.”
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