Lloyds Bank Set to Pay £1,100 Compensation to Thousands After Car Finance Ruling

• Lloyds Bank among lenders facing payouts for mis-sold car finance deals
• Thousands of customers could receive £1,100 due to undisclosed commissions
• Applies to certain car finance deals made before January 2021

Thousands of Lloyds Bank customers may be entitled to £1,100 in compensation following a court ruling on mis-sold car finance deals, potentially affecting drivers across the UK. The recent decision highlights historic car finance arrangements where dealerships set interest rates to boost their own commissions, often without informing customers.

The Financial Conduct Authority (FCA) is also investigating claims of widespread misconduct linked to discretionary commission arrangements (DCAs), which allowed dealerships to raise interest rates on car finance deals to earn higher commissions. The FCA estimates that this arrangement might have impacted up to 40% of car deals, with customers potentially paying an additional £1,100 over a typical four-year loan.

Eligibility for compensation hinges on having taken out a car finance deal before January 2021, specifically through Personal Contract Purchase (PCP) or Hire Purchase (HP) agreements. Leasing arrangements like Personal Contract Hire are not covered by this potential compensation.

Tom Church, Co-Founder of LatestDeals.co.uk, remarked, “This ruling is a significant step in holding lenders accountable. Compensation can make a real difference to those affected by these finance deals, which often came with unexpected costs.”