Bulletin: U.K. Supreme Court Ruling Limits Motor Finance Lenders? Customer Redress Costs

This report does not constitute a rating action. LONDON (S&P Global Ratings) Aug. 4, 2025--S&P Global Ratings today said the U.K. Supreme Court?s judgment on motor finance commissions provides legal clarity and lowers the scope of lenders? remediation charges. The Financial Conduct Authority (FCA) has confirmed it will proceed with a customer redress scheme that it expects will cost the motor finance industry between £9 billion and £18 billion. We think rated U.K. lenders have ample capacity to absorb the required remediation charges at the current rating levels due to their existing provisions and robust earnings. Motor finance market leader Lloyds Banking Group PLC (BBB+/Stable/A-2) announced today that any further change to its existing £1.15 billion provision is unlikely to

...August 4, 2025 This report does not constitute a rating action. LONDON (S&P Global Ratings) Aug. 4, 2025--S&P Global Ratings today said the U.K. Supreme Court's judgment on motor finance commissions provides legal clarity and lowers the scope of lenders' remediation charges. The Financial Conduct Authority (FCA) has confirmed it will proceed with a customer redress scheme that it expects will cost the motor finance industry between ú9 billion and ú18 billion. We think rated U.K. lenders have ample capacity to absorb the required remediation charges at the current rating levels due to their existing provisions and robust earnings. Motor finance market leader Lloyds Banking Group PLC (###+/Stable/A-2) announced today that any further change to its existing ú1.15 billion provision is unlikely to be material. On Aug. 1, 2025, the Supreme Court upheld motor finance lenders' appeals against two of three test cases and rejected the other. In all three cases, the court concluded that the lenders...

Bulletin