Company: LLOBF
Filing Date: 2025-10-23
Form Type: 6-K
Source: 0001160106-25-000041
Chunk: 4

Company: Lloyds Banking Group plc
Filing Date: 2025-10-23
Form: 6-K
Chunk 4
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 discipline. Operating lease depreciation was higher due to fleet growth, the depreciation of higher value vehicles and declines in used electric car prices . A remediation charge of £ 912 million was recognised by the Group in the first nine months of 2025 (nine months to 30 September 2024: £ 124 million), including an £800 million charge in the third quarter in relation to the potential impact of motor finance commission arrangements, bringing the total provision for motor finance to £1,950 million. The FCA published a consultation on an industry wide motor finance redress scheme on 7 October 2025. This provides further detail on its proposed redress approach following the Supreme Court judgment handed down on 1 August 2025, in particular the products in scope, situations where it considers inadequate disclosure would give rise to an unfair relationship, proposed redress methodology, engagement approach and time bar. Based on the FCA proposals in their current form, the potential impact is at the adverse end of the Group’s range of expected outcomes. As previously stated, in establishing the Group’s previous provision of £1,150 million, the Group created a range of scenarios to address uncertainties on a number of key inputs. The FCA proposals are subject to consultation and there remain a number of uncertainties. Accordingly, the Group’s approach continues to consider a probability weighted outcome considering a range of scenarios representing sensitivities to the FCA’s current proposals, together resulting in the additional charge of £800 million. This reflects the increased likelihood of a higher number of historical cases, particularly DCA, being eligible for redress, including those dating back to 2007 and also the likelihood of a higher level of redress than previously anticipated, reflecting the FCA’s proposed redress calculation approach, which is less closely linked to actual customer loss than anticipated. The Group remains committed to ensuring customers receive appropriate redress where they suffered loss. The current FCA proposals remain a consultation. Given that the Group has concerns, including relating to the approach to unfairness and proposed redress methodology, representations will be made to the FCA. The ultimate outcome of the motor finance commission issue for the Group may evolve as a result of representations made by various parties as well as further legal proceedings. However, the total £1,950 million provision, including both redress and operational costs, represents the Group’s best estimate of the potential impact of the motor finance issue.

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FINANCIAL REVIEW (continued) Income statement (continued) Asset quality has remained