The finance boss of Lloyds Banking Group has declined to rule out a legal challenge to the financial watchdog's motor finance redress scheme after the bank's provision for payouts under the scheme delivered a blow to its bottom line.
William Chalmers, the chief financial officer of Lloyds, said the FTSE 100 giant was "concerned" about the proposed scheme from the Financial Conduct Authority (FCA), as reported by .
He added the scheme risked "producing anomalous outcomes for customers" which was "not a sensible place to be".
"We will be very much playing our role in the FCA consultation process and we do hope that results in a constructive dialogue".
When pressed whether the lender would take the FCA to court should its redress not fall within Lloyds' preferred scope, Chalmers said: "I shan't comment any further on what we'll do beyond the consultation process itself."
'Not proportional or reasonable'
Charlie Nunn, the chief executive of Lloyds, raised concerns about the redress scheme earlier this week, warning it could strip two decades of profitability from the car finance industry.
Lloyds increased its provisions to £2bn for the car-misselling scandal earlier this year, after adding an additional £800m.
It followed the Supreme Court backing lenders on two out of three cases relating to the car-misselling saga, but upholding the case of one claimant under the grounds their 55 per cent commission was "unfair."
The FCA's proposed redress, which is open for consultation until 18 November, sets the threshold at 35 per cent, with an estimated 14.2 million agreements potentially qualifying.
Lloyds, the parent company of the º£½ÇÊÓƵ's largest motor finance lender Black Horse, has criticised the scheme as neither proportional nor reasonable in ensuring customers are adequately compensated, arguing it does not reflect the "actual loss" experienced by borrowers.
The bank further stated that the Financial Conduct Authority's approach to "unfairness" did not align with the legal clarity provided by the Supreme Court in August.
In response to criticism from motor finance lenders, the FCA said: "Recent court judgments show that liabilities exist no matter what. We believe our scheme is the best way to settle the issue for both consumers and firms, and alternatives would be more costly and take longer."
The regulator added: "We recognise not everyone will get everything they would like. But it's vital we draw a line under the issue so a trusted motor finance market can continue to serve millions of families every year."
