31st Mar 2026 12:28
(Alliance News) - Secure Trust Bank PLC on Tuesday noted the UK financial watchdog's announcement on motor finance redress.
"The group is reviewing the details of the FCA's scheme, including the implementation requirements and financial implications. The group will provide further updates to the market as appropriate," it said.
Shares in Secure Trust Bank, which exited the motor finance space in February, were up 2.8% at 1,270.00 pence each on Monday afternoon in London.
The West Midlands, England-based financial institution last month sealed the sale of its vehicle finance arm to funds managed by LCM Partners.
"The group will remain responsible for administering, and retain liability for, payments due to customers under the FCA's motor finance commissions redress scheme," it explained back in December, however.
Financial Conduct Authority on Monday confirmed it will proceed with an industry-wide motor finance redress scheme, aiming to compensate millions of customers who were treated unfairly by lenders.
The regulator estimated around 12.1 million agreements will be eligible for redress, down from 14.2 million proposed at the consultation stage, after tightening eligibility criteria.
The scheme is expected to see firms pay out around GBP7.5 billion in compensation, with total costs including administration estimated at GBP9.1 billion. This is lower than earlier projections of up to GBP11 billion.
Lloyds Banking Group PLC shares also moved higher on Tuesday as the lender said it will look into the redress scheme.
Bank of Ireland Group PLC, meanwhile, also noted the update from the FCA and added that it is "assessing the potential financial impact".
Lloyds shares rose 1.7% to 92.86 pence in London on Tuesday afternoon, while Bank of Ireland added 1.5% to EUR15.36.
Other firms which have had an exposure to vehicle finance also traded higher. Close Brothers Group PLC was up 3.2% at 393.80p, Moneybarn owner Vanquis Banking Group PLC added 1.3% at 111.00p and S&U PLC rose 1.4% to 1,814.19p. Barclays PLC rose 1.3% to 390.00p.
Banco Santander SA also has an exposure. It was up 0.5% at EUR9.54 in Madrid.
Lloyds, which owns Black Horse, had previously raised its provisions for exposure to the scheme to around GBP2.0 billion from GBP1.2 billion.
"The details of the final scheme differ from the scheme as laid out in October 2025 and require careful analysis. Accordingly, the group is assessing the implications and impact of the final rules. The group will update the market as and when appropriate," Lloyds said on Tuesday.
Bank of Ireland's provision stands at EUR429 million.
"The group is assessing the potential financial impact of the final scheme and is committed to achieving a fair outcome for customers, ensuring appropriate redress is provided where loss has occurred," it said on Tuesday.
Deutsche Bank analyst Robert Noble does not expect Lloyds to change its provision much.
Noble commented: "The FCA motor finance consumer redress scheme has been confirmed with softer conditions and a smaller industry wide impact estimate. It is difficult to tell how it will impact individual banks and we await their statements on the matter. Lloyds have said previously that if the previous FCA proposal were enacted in full it would not move their provision much. We assume therefore the softer proposals will mean Lloyds does not materially change their provision."
Close Brothers has set aside GBP300 million. Late Monday, it said it was "assessing the potential implications of the redress scheme on the group".
Noble added: "Close Brothers has been less specific- post the last consultation the company said that the cost could be materially higher or lower than their existing GBP300 million provision. And so while the proposal is softer it's not clear yet what the impact will be."
By Eric Cunha, Alliance News news editor; updated by Martin Miraglia, Alliance News reporter
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