Isobel FraserLloyds Banking Group reported statutory profits of £1.555 billion in Q1 2026 — a 37% year-on-year increase — while simultaneously managing the largest consumer redress programme in UK banking history. The FCA's Motor Finance Consumer Redress Scheme, confirmed in March 2026, is expected to return £7.5 billion to UK car loan customers industry-wide, with an average payout of approximately £830 per agreement. If you took out a car finance deal between 2007 and 2024, you may be owed money — and you do not need to pay anyone to claim it.
What Is the Motor Finance Scandal
Between 2007 and 2021, many UK car dealerships received undisclosed commission payments from lenders in exchange for setting higher interest rates on car finance agreements. The practice — known as discretionary commission arrangements (DCAs) — meant customers paid more than they needed to, without being told why. The Supreme Court ruled in October 2024 that these arrangements were unlawful, and the FCA launched a formal investigation.
In March 2026, the FCA published its final policy under Policy Statement PS26/3: a structured Motor Finance Consumer Redress Scheme requiring lenders to identify, contact, and compensate affected customers. Lloyds Banking Group — through its Black Horse lending arm — is the largest single participant in the scheme.
Lloyds' Specific Exposure
Lloyds has set aside a total provision of £1.95 billion for motor finance redress. In May 2026, following the FCA's publication of final scheme rules, Lloyds stated it saw "no change to provision required" — indicating confidence that £1.95 billion covers its total liability. That figure represents one of the largest consumer redress provisions in the bank's history.
For context, Lloyds' Q1 2026 profit of £1.555 billion shows the bank is profitable enough to absorb this obligation — but the provision amount also signals the enormous scale of the underlying compensation owed to customers. Industry-wide, the FCA estimates total redress at £7.5 billion across all lenders.
Black Horse is one of the UK's largest car finance providers. You may have a Black Horse agreement even if you arranged your finance through a car dealership rather than directly through a bank. Halifax and Bank of Scotland, also part of Lloyds Banking Group, also offered motor finance products during the relevant period.
Are You Eligible? Key Dates and Criteria
The FCA scheme covers two separate time periods with separate redress structures:
2014 to 2024 agreements: Payments under this portion of the scheme are expected to begin during 2026. Lenders are required to identify affected customers and contact them directly.
Pre-2014 agreements (2007 to 2014): Lenders must establish a separate redress scheme for this period by August 2026. Contact from your lender may not arrive until later in 2026 or into 2027.
The complaint deadline is 31 August 2027. If you do not hear from your lender before that date, you can submit a complaint directly.
You may be eligible if you financed a vehicle through any of the following: Black Horse, Halifax, Bank of Scotland, Halifax Financial Services, or any other dealer-arranged finance backed by a Lloyds subsidiary. You should also check whether you have eligible agreements with other lenders — the scheme covers the entire industry, not just Lloyds.
How to Claim — and What Not to Do
The FCA scheme is free to use. You do not need a claims management company. You do not need a solicitor to file a basic complaint. The process involves contacting your lender directly, identifying the agreement, and waiting for the lender's assessment. If you are unhappy with the outcome, you can escalate to the Financial Ombudsman Service.
There is one important caveat. If you have multiple agreements — with the same or different lenders — or if you believe your settlement offer does not fairly reflect the interest overpaid, independent financial advice or consumer law legal advice is worth seeking. A financial adviser or consumer law solicitor can assess whether the calculation methodology is correct and whether the offer represents fair redress.
Do not be pressured by marketing from claims management companies offering to handle your complaint for a percentage of any payout. The FCA scheme is specifically designed to make this unnecessary.
Lloyds' Wider Financial Position in 2026
The motor finance provision sits alongside a stronger-than-expected financial performance. Q1 2026 results showed:
- Statutory profit after tax up 37% year-on-year to £1.555 billion
- Underlying net interest income guidance raised to £14.9 billion for full-year 2026 — up from £13.6 billion in 2025
- Operating costs fell 3% to £2.474 billion, improving the cost-to-income ratio from 58.1% to 51.9%
The bank's profitability is being driven by higher interest rates sustaining net interest margins, even as the base rate environment begins to ease. For customers with Lloyds mortgages or savings products, the improving margins mean the bank is extracting more from existing relationships — an argument for reviewing whether current mortgage or savings rates remain competitive.
Getting Financial Advice on Your Lloyds Products
If you have motor finance, a mortgage, pension, or investment product with Lloyds or any of its subsidiaries, May 2026 is a reasonable moment to review your position. Motor finance redress eligibility, mortgage rate competitiveness in a softening rate environment, and the value of existing savings products are all worth examining together.
ExpertZoom connects UK residents with independent financial advisers and consumer law solicitors who specialise in financial product reviews, redress claims, and bank conduct matters. Independent advice is particularly valuable when assessing whether a redress offer is fair — calculations are lender-controlled, and errors can be challenged.
You can also review the NatWest branch closures and digital banking guidance published on ExpertZoom for broader context on how UK banking is changing in 2026 and what that means for customers who rely on branch services.
The FCA's Motor Finance Consumer Redress Scheme policy statement PS26/3 sets out the full scheme rules, eligibility criteria, and complaint escalation route — the authoritative starting point before you seek tailored advice.
