LONDON (dpa-AFX) - Lloyds Banking Group (LYG, LLOY.L, LLD.DE) announced that it continues to assess the impact and implications of the recently published the Financial Conduct Authority or FCA consultation paper on motor finance. While uncertainties remain regarding the interpretation and implementation of the proposed scheme, the Group's initial analysis suggests that an additional provision may be necessary-and could be material.
Motor finance encompasses various financial products-such as hire purchase, personal contract purchase (PCP), and leasing-that enable consumers to obtain vehicles through monthly payments instead of paying the full price upfront. These agreements typically include interest charges and may offer options to buy, return, or refinance the vehicle at the end of the term.
The FCA's recent proposal aims to address concerns around historical commission arrangements and potential overcharging in motor finance agreements.
According to FCA, the payouts on an estimated 14 million unfair motor finance agreements could begin next year, under a proposed industry-wide compensation scheme from the Financial Conduct Authority (FCA).
The FCA projects that affected individuals may receive approximately 700 pounds per agreement on average. Based on its estimates of consumer participation, total compensation from lenders could reach 8.2 billion pounds.
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