9th Oct 2025 14:29
(Alliance News) - Bank of Ireland Group PLC on Thursday said the Financial Conduct Authority's proposed compensation scheme for UK motor finance customers means it is likely to have to increase its existing provision.
The Dublin-based lender said it is continuing to assess the full details of the redress scheme and will engage in the consultation process over the coming weeks.
On Tuesday, the regulator estimated that compensation for mis-sold car finance could cost UK banks around GBP8.2 billion, below its earlier forecast range of GBP9 billion to GBP18 billion.
The regulator said around 14.2 million agreements, or 44% of those made since 2007, are likely to be considered unfair due to inadequate disclosure.
The FCA expects an 85% participation rate in the scheme, bringing total redress to GBP8.2 billion, including interest. Implementation and operational costs could add another GBP2.8 billion, taking the total estimated cost to GBP11 billion.
On Thursday, Bank of Ireland said based on its preliminary analysis an increase in its provision is likely to be required, which may be material.
At the end of June, the company had a provision of GBP143 million.
Bank of Ireland said any change remains subject to ongoing analysis and review of the proposals.
The firm added that it has a strong capital provision, with a pro-forma common equity tier 1 ratio of 16% at the end of June, and continues to be a "highly capital generative" business.
Shares in Bank of Ireland were down 0.6% at EUR14.36 in London on Thursday afternoon.
By Michael Hennessey, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.
Related Shares:
Bank Of Ireland