Lloyds Sets £1.2B for Motor Finance Scandal

Lloyds Banking Group has increased its provision for potential compensation related to the car finance mis-selling scandal to £1.2 billion, significantly impacting its annual profits, which fell 20% to £6 billion. The additional £700 million provision comes after a court ruling deemed it illegal for car dealers to receive undisclosed commissions on finance deals. The bank's Black Horse brand is notably exposed to this market, as millions of customers may be eligible for compensation. Other banks, such as Barclays and Close Brothers, are also setting aside funds in anticipation of similar claims. The Supreme Court is set to hear appeals related to this judgment in April, with significant uncertainty remaining about the final financial implications. Analysts speculate that the total industry-wide impact could rival the financial fallout from the PPI scandal.