20th Oct 2025 09:09
(Alliance News) - Bank of Ireland Group PLC on Monday said it may need to double its motor finance redress provision, following proposals from the UK regulator earlier this month.
The Dublin-based lender had warned early in October of a potential increase in the amount to be set aside. On Monday, it said the provision may need to rise to GBP350 million, more than double the GBP143 million figure expected previously.
Should the provision reach that level of GBP350 million, Bank of Ireland estimates a 35 basis-point reduction in its common equity tier 1 ratio of 16%, but stressed that it remains "highly capital generative" and that the motor finance cost impact remains subject to change.
The bank attributed the potentially higher cost provision to the UK Financial Conduct Authority's proposed methodology for redress and "customer engagement approach", which it sees leading to a higher likelihood of eligible cases.
It plans to engage with the regulator, on the basis that the bank does not believe the scheme "reflects the actual loss to customers or achieves a proportionate outcome".
Bank of Ireland added: "The FCA's proposed approach for assessing unfairness does not align with the legal clarity provided by the recent UK Supreme Court judgement."
Back in August, the Supreme Court overturned a prior ruling by the Court of Appeal. The Supreme Court determined that commissions paid to motor dealers acting as credit brokers did not constitute bribes, and therefore that dealers did not owe fiduciary duties to customers.
The FCA responded by launching its own consultation, and proposing a industry-wide redress scheme.
The Irish bank joins Lloyds Banking Group PLC, Close Brothers Group PLC and FirstRand Ltd in warning that their motor finance redress provisions may be higher than originally expected.
Bank of Ireland's third-quarter management statement is due on October 29. Its shares were up 0.8% at EUR13.22 on Monday morning in London.
By Holly Munks, Alliance News reporter
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