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Lloyds Banking Group has said it will take an additional £800mn provision to cover the cost of the long-running car finance mis-selling scandal.
The move by Lloyds to take an extra charge comes after the Financial Conduct Authority said last week that the mis-selling scandal would cost banks a total of £11bn.
Lloyds is the UK’s biggest provider of car finance through its Black Horse business and has already taken a £1.2bn provision to cover the cost of the compensation scheme.
According to a statement from Lloyds on Monday, the FCA’s ruling increased the risk that the bank would have to provide a “higher level of redress” to customers.
It added that the FCA’s ruling meant the potential impact on the bank was at “the adverse end of the range of previous expected outcomes”.
The scandal stems from commissions paid by lenders to motor dealerships as part of millions of vehicle sales over many years, which the regulator and courts have said provided an incentive for higher interest rates and were insufficiently disclosed to consumers.
