April 10 (Reuters) - Lloyds Banking Group will not launch a legal challenge against the UK financial regulator's 9.1 billion pound ($12.25 billion) compensation scheme for consumers who were allegedly
Lloyds Won't Challenge UK's £9.1bn Car Finance Compensation Scheme
Lloyds' Response to the UK Car Finance Compensation Scheme
Background of the Compensation Scheme
April 10 (Reuters) - Lloyds Banking Group will not launch a legal challenge against the UK financial regulator's 9.1 billion pound ($12.25 billion) compensation scheme for consumers who were allegedly mis-sold car finance, the Financial Times reported on Friday.
The development comes as banks and vehicle manufacturers with finance divisions, which have collectively set aside billions of pounds for compensation, review whether they need to adjust their provisions or legally challenge the scheme.
Details of the FCA's Directive
The Financial Conduct Authority (FCA) last month told the country's motor finance industry to compensate motorists after inadequately disclosing commissions and contractual ties between lenders and car dealerships over a 17-year period until 2024.
Lloyds' Official Statement
"We have carefully considered the FCA motor finance redress scheme. While we remain disappointed in and disagree with its conclusions, we believe that moving forward with the scheme is now the right step for our customers and shareholders," a Lloyds spokesperson said in an emailed statement.
Previous Considerations and Adjustments
Lloyds had previously considered mounting a legal challenge against the scheme as it believed the regulator did not adhere to court judgments, FT reported.
The final headline bill was trimmed from the FCA's original 11 billion pound estimate after the regulator reduced forecasts for administrative costs, adjusted eligibility criteria and lowered forecasts for motorist participation.
Additional Information
($1 = 0.7427 pound)
(Reporting by Preetika Parashuraman in Bengaluru and Mrinmay Dey in Mexico City; Editing by Shreya Biswas)
