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Shares The UK’s largest car lender has increased after Britain’s financial sentinel after softening the estimated total cost to the industry under its compensation scheme.
Lloyds Banking GroupClose Brothers Group, and Barcalage All the stocks were increasing more on Wednesday morning.
It comes after Financial conduct authority (FCA) set proposals for its prevention plan, the aim is to compensate the customers with which a car loan was sold between 2007 and 2024.
The FCA estimates that the lenders may legisine the total bill of payment of compensation of £ 8.2 billion, based on about 85% of the eligible consumers participating in their plan.
This increases to £ 11 billion once after the cost of implementing and working the scheme.
Nevertheless, it could bring some relief for lenders, which were previously reported that the total cost of the industry could be between £ 9 billion and £ 18 billion.
The FCA also stated that the driver could get less than £ 950 per motor finance deal per motor finance deal, but on Tuesday it was confirmed that the payment was likely to be £ 700 on average.
Lloyds Banking Group, which is a significant risk to the motor finance market through its black horsepower, accepted FCA’s proposals.
This told investors that it was “currently assessing the implication and impact of this consultation and assessing the impact of this consultation in the context of its current provision for the issue and would update the market when appropriate”.
Lloyds first set a side of £ 1.2 billion to cover compensation related to potential costs and compensation.
The stock price of the banking group had increased by about 3% on Wednesday morning, and both Barclays and the Close Brothers Group were growing by about 1.5%.
Barclays has kept some £ 80 million aside in relation to the issue of motor finance, while the provisions of close brothers have reached £ 165 million.
Sentnder, another major motor finance lender, who is not listed on London Stock ExchangeIt is said that it was setting £ 295 million separately.
Gary Greenwood, an equity analyst at noise capital, stated that he has estimated that the motor finance industry has created a combined total provisions of about 2 billion pounds, “important further provisions may be required”.
Danny Hevson, head of financial analysis for AJ Bell, said: “Lenders had already breathed a sigh of relief about compensation scale, they would have to catch motorists and bring the Tuesday’s update bar even less.
“But 14 million car buyers have stated by the regulator that motor finance firms stand to receive compensation after breaking the rules and did not properly inform the motorists of the commission that the dealers were being paid.
“While this scam does not come close to the PPI around that, it leaves a bad taste with many motorists.”