UK banks have been working out how much they need to set aside to cover the motor finance commission saga that has played out over a number of years. Lloyds Banking Group is the latest to spell out the likely effect.

Pre-tax profit at UK-listed Lloyds Banking Group fell by 36 per cent year-over-year in the third quarter of 2025, to £4.678 billion (£6.23 billion) after the bank said costs of remediating motor finance commissions could cost £800 million.

The motor finance impact has been felt at other UK banks, such as Barclays and Close Brothers, as reported here and here, respectively. 

The Q3 remediation charge stands at £875 million, versus £29 million a year earlier. Lloyds said its total motor finance provision of £1.95 billion represents its “best estimate” of the potential impact of this issue.

The motor finance scandal centres around car finance deals that were sold in ways that were not fully transparent or fair, particularly through hidden commission schemes and discretionary commissions. Earlier in October, the Financial Conduct Authority issued a consultation paper on 7 October about a proposed industry-wide redress scheme. The scheme would cover regulated motor finance agreements taken out by consumers between 6 April 2007 and 1 November 2024 where commission was payable by the lender to the broker. Based on an 85 per cent of eligible consumers taking part, the industry will face a £11 billion total redress bill, with around £700 in the average compensation per case. 

Net income in the quarter rose 7 per cent on a year earlier to £4.463 billion; total costs rose to £3.177 billion from £2.321 billion, the group said in a statement. 

As far as wealth management activity is concerned, Lloyds – as reported here – announced that it was fully acquiring Schroders Personal Wealth, previously operated as a joint venture with Schroders Group. The acquired business supports about £17 billion in assets under administration. This move “accelerates delivery of the group's wealth strategy to deepen relationships in a high value segment,” Lloyds said yesterday.

The bank said it had a Common Equity Tier 1 ratio of 13.8 per cent, taking into account the 74 basis points for the interim ordinary dividend paid and the foreseeable ordinary dividend accrual.