Lloyds Banking Group has been forced to put aside £450m for potential fines and compensation for motor finance customers, after the UK regulator opened an investigation into whether consumers had been charged inflated prices for car loans.
The lender, which also owns the Bank of Scotland and Halifax brands, said there was “significant uncertainty” over the extent of any misconduct or loss to customers that could result in penalties or payouts.
It also said it was unclear when the Financial Conduct Authority might complete its investigation, creating further uncertainty for the high street lender. The consumer champion Martin Lewis said last month the investigation could lead to “the new PPI” – a reference to the multibillion-pound payment protection insurance scandal.
However, the charge did not weigh on the bank’s annual pre-tax profits, which rose 57% to £7.5bn compared with £4.8m a year earlier. The bank was helped by a 3% rise in net interest income – which accounts for the difference between what is paid to savers compared with what is charged to loans and mortgage customers – to £13.3bn.
The jump in profits did not translate to an increase in staff payouts, though. Bankers are in line to share a £384m bonus pot for their work in 2023, compared with £446m a year earlier.
The chief executive, Charlie Nunn, received a £3.7m pay package, including a £1.3m bonus. That was down from the £3.8m in total pay that Nunn was granted for 2022, when he announced a £3bn overhaul.
Under Nunn, the bank is aiming to push further into digital banking, bulk up the corporate bank and wealth division, and strengthen Lloyds’s position as a UK landowner. The shake-up led Lloyds to cut more than 4,600 jobs last year.
Nunn said the group was “focused on proactively supporting people and businesses through persistent cost-of-living pressures” during 2023.
This article was written by Kalyeena Makortoff Banking correspondent from The Guardian and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.