Banks stay firm on compensation provision ahead of Supreme Court decision

Lenders are holding fire on increasing their provision for any compensation due as a result of the Supreme Court decision due on Friday, with two of the UK’s biggest banks announcing there is no change in the amounts they have set aside in respect for any potential consumer redress scheme relating to car finance arrangements.

Last week Lloyds confirmed in its half year results that the bank is maintaining its previously-announced £1billion-plus provision for any auto finance claims relating to its Black Horse subsidiary.  This week, just three days before the Supreme Court hands down its judgment, Barclays, which has exposure via its Clydesdale Financial Services arm reported “no change” to the £90 million it has set aside.

Lloyds stated: “In establishing the provision of £1.15 billion, the Group has considered a number of scenarios to address uncertainties around a number of key assumptions. These include a range of potential Supreme Court outcomes, regulatory responses including steps that the FCA may take, and outcomes in relation to redress.”

Noting that it had ceased operating in the motor finance market in late 2019, although historical operations before this date could be in scope, Barclays said: “Barclays reassessed the provision as at 30 June 2025 and determined that no material adjustment was required. The legal and regulatory outcomes and the nature, extent and timing of any remediation action, if required, remain uncertain and as a result the ultimate financial impact could be materially different to the amount provided.”

“Without clarity, there can be no action. That is why we at AFC, along with our legal partners Shoosmiths, are determined to support the asset finance community, with live coverage of the Supreme Court judgment and immediate reaction from our panel of industry experts.”

Don’t miss your chance to join the AFC/Shoosmiths webcast, sponsored by Odessa, for the first in-depth and independent analysis of the Supreme Court’s landmark ruling on commission disclosure in auto finance. The 90-minute session begins at 9am on Monday 4^th August and will feature expert insight from leading industry figures and legal professionals. Stay informed with a forensic breakdown of the judgment, its implications for compliance and redress, and what the industry should expect next. Secure your place now by registering here.