Shares in motor finance lenders experienced a boost on Wednesday morning following the Financial Conduct Authority's significant update on its industry-wide redress scheme.
Lloyds Banking Group, which owns Black Horse, the 海角视频's largest motor finance provider, saw an increase of over two per cent to 85.06p, as reported by .
Close Brothers, which recently allocated an additional £33m provision for motor finance related to "historical deficiencies," saw a jump of as much as six per cent to 525.58p.
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Specialist lender Secure Trust also saw an increase, with shares up three per cent to 1,220.00p. Barclays, which has set aside £90m in provisions, saw a one per cent rise to 382.40p.
This comes after the Financial Conduct Authority (FCA) predicted that the total cost of its redress scheme would be at the lower end of expectations, around £11bn including administrative fees.
The City watchdog had previously estimated costs between £9bn and £18bn.
The FCA stated that its estimate of 85 per cent participation is based on rates from past redress schemes and the regulator's consumer research, which indicated that 14 per cent of past and current motor finance holders do not intend to make a claim.
Approximately 14.2 million agreements from 2007 to 2024 are expected to be eligible for compensation.
Motor finance lenders likely to have 'overprovisioned'
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"Lenders had already breathed a sigh of relief about the scale of the compensation they would have to dish up to motorists and today's update from the FCA brings the bar even lower," commented Danni Hewson, AJ Bell head of financial analysis.
"But 14 million car buyers do stand to receive a significant amount of compensation after the regulator said motor finance firms broke rules and didn't properly inform motorists of the commission that was being paid out to dealers."
Benjamin Toms, equity analyst at RBC, suggested that the new update indicated banks had "overprovisioned".
Lloyds has set aside a total of £1.2bn for the saga, while Santander is liable for £295m and Close Brothers £165m.
Car manufacturers have also been compelled to allocate funds, with BMW earmarking £200m and Ford £61m.
Following the Court of Appeal's October ruling, which was largely overturned by the Supreme Court, several notable names have exited the car finance market.
Earlier this year, Santander announced its decision to spin off its motor finance division. Concurrently, specialist lender Secure Trust Bank declared it would phase out its loan book.