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UK Auto Lenders Facing £13bn in Restitution

UK Auto Lenders Facing £13bn in Restitution

by Starling Insights

Starling Insights Editorial Board

Jan 29, 2024


Auto lenders in the UK could face up to £13 billion in restitution as the Financial Conduct Authority (FCA) probes commission agreements that allegedly led to consumers overpaying as far back as 2007, as reported by the Financial Times.

The FCA is investigating the use of "discretionary commissions," which incentivized finance brokers and dealers to raise interest rates on auto loans until the practice was banned in 2021. Some of the UK's biggest banks — including Lloyds, Barclays, and Santander — have substantial exposure to these costs. Lloyd's alone could be on the hook for up to £1.8 billion, as it owns the country's largest auto lender, Black Horse.

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