Lloyds (Lloy.l) revealed that he had allocated £ 1.2 billion to cover the potential cost of compensation for the engagement committee arrangements, as the bank’s annual profit slid with the fifth.
An additional provision of £ 700 million, taken in the last three months of the year, added £ 450 million to the already confirmed last year.
The banking group is on the market through its Black Horse brand, which is one of the biggest suppliers of car financing in the UK.
The so -called arrangements for hidden committees between car traders and borrowers are the subject of a major review by the UK’s financial guard, as well as remarkable lawsuits.
In its annual results, Lloyds reported a profit before taxes of £ 6 billion in 2024, fifth lower than £ 7.5 billion, generated the previous year and came below the expectations of analysts.
The profits were weighed by the group that generated less income last year, spending more on business costs and leaving more money aside.
The price of the shares, however, increased by 6% on Thursday after the bank said it had expenses and distributed more money to shareholders.
Lloyds said the additional provision of 700 million British pounds for motor finance was taken in the light of a judgment on the issue in October.
This found that it was illegal to get car dealers to receive a commission on motor finances from creditors without informed consent of the client.
The solution opened the door to a potential fresh wave of complaints from users who believe that car financing may have been missed in previous years.
Lloyds CEO Charlie Nun said investors were “concerned” on the matter, as the solution “seems to be contrary to 30 years of regulation and this creates a problem in investor consciousness”.
“Not only for this sector, not just for the financial services sector, but in fact a wider issue of investing in the UK.
“The significant uncertainty surrounding the final financial impact remains,” said G -n Nun, adding: “In this context, we welcome the accelerated hearing of the Supreme Court in early April.”
He stressed that the bank is comfortable with the amount it has allocated for the problem, which is its “best estimate” on what the impact may be.
“Of course, the ultimate financial impact may be less or higher than that -we will have to see how things are going,” said William Chalmers, Lloyds Finance Chief.
The total 1.15 billion British pounds is the largest amount compared to three of the other major lenders in the UK – Santander (Bnc.l), Barclays (Barc.l) and Close Brothers (CBG.L) – which all revealed their own Reserves in recent weeks.