From Yahoo Finance: 2025-05-27 11:31:00

The UK Supreme Court is set to rule on whether car finance providers, including Lloyds, broke the law by not disclosing commission arrangements to borrowers. Despite claims of “no harm,” Lloyds has set aside over £1.1 billion for redress, raising questions about customer detriment and financial provisions.

Lloyds CEO Charlie Nunn argued that Black Horse, its motor finance arm, offers competitive rates and customers were unlikely to find better deals elsewhere, even without disclosed commissions. However, financial provisions totaling £1.15 billion suggest potential harm, operational expenses, and the need to comply with accounting principles.

The burden of proof lies with lenders to show no harm to customers, especially if the Supreme Court confirms the need for commission disclosure. Missing data from standard retention policies may hinder this process, potentially leading to up to £1.18 billion in compensation losses for consumers.

The FLA acknowledges the challenges of missing data and the need for fair outcomes. If a redress scheme is mandated, lenders like Lloyds will need robust documentation systems. Operational readiness, benchmark rates, and evidence of competitive pricing will be crucial to avoid defaulting to redress.

Despite not admitting liability, Lloyds’ financial provisions suggest preparation for potential outcomes based on the inability to demonstrate harm. The ability to evidence competitive pricing across legacy agreements will be critical, as Lloyds and other lenders face scrutiny over customer harm claims.

Read more: Lloyds faces questions on ‘no harm’ claims amid mounting provisions