How Big is the Motor Finance Scandal? Analyst Consensus Reveals Billions in Hidden Exposure
- Sam Ward
- 1 day ago
- 3 min read
New Data from Close Brothers and Lloyds Suggests Major Under provisioning Across the Sector
Sentinel Legal has reviewed the latest analyst consensus forecasts from both Close Brothers Group and Lloyds Banking Group (Black Horse) and the findings point to a staggering shortfall in provisions across the UK motor finance market. The financial community is waking up to the reality: billions in redress liabilities are yet to be recognised.
Close Brothers Car Finance Claims
On 16 April 2025, Close Brothers published sell-side analyst consensus figures covering expected redress costs for mis-sold motor finance commission arrangements.
Key Forecasts from Analysts:
- Low estimate: £165 million (in line with current provision)
- Average estimate: £296 million
- High estimate: £525 million
That’s a potential shortfall of £360 million, implying the true redress cost may be more than three times what Close Brothers has set aside.
Given Close Brothers’ estimated 1.5% share of the UK motor finance market, this translates to an industry-wide benchmark of £350 million per 1% of market share.
Blackhorse Car Finance Claims: Analyst Sentiment is Shifting
The recently released Q1 2025 Lloyds Banking Group consensus adds further weight to this analysis.
In the document, analysts forecast a steady increase in remediation costs across FY25–27:
- FY24 remediation (actual): £899 million
- FY25 consensus: £1,034 million
- FY26 consensus: £1,053 million
Notably, the report states: “A number of analysts have included additional Motor Finance charges; these vary in quantum and timing.”
Even post provisioning £1.15 billion, the financial markets are still anticipating more redress to come. The cautious tone reflects the legal uncertainty ahead of the Supreme Court’s decision, but the direction of travel is clear.
What Is the Car Finance Scandal About?
The FCA is currently investigating how car dealers and finance providers operated discretionary commission arrangements (DCAs) where brokers were incentivised to charge higher interest rates without disclosing the commissions involved.
These practices, now banned, are alleged to have caused widespread consumer harm across more than a decade.
A Court of Appeal judgment in Johnson v FirstRand confirmed that secret or partially disclosed commissions could result in an “unfair relationship” under the Consumer Credit Act.
The FCA has paused complaint handling until December 2025, pending the outcome of the Supreme Court ruling and industry wide consultation.
Why the Close Brothers Announcement Matters
Close Brothers holds an estimated 1.5% share of the UK motor finance market, yet the high-end analyst forecast of £525 million implies an industry wide liability of £35 billion+ if other lenders show similar patterns of exposure per market share.
Even using the analyst consensus average of £296 million suggests a near-doubling of Close Brothers' current provision.
Make Your Car Finance Claim Today
If you live in the UK and have had a car on finance whether through PCP, HP, or another plan you may be entitled to compensation for mis-sold Car Finance.
✅ Check if you qualify for a Car Finance Claim in under 60 seconds:
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Frequently Asked Questions (FAQs)
What is the motor finance mis-selling scandal?
The scandal involves UK car finance lenders and brokers failing to disclose high commission payments that incentivised them to inflate customer interest rates. These hidden commissions created unfair costs for consumers, often without their knowledge or consent.
How much could I be owed from a car finance claim?
The average claim value varies by case, but many consumers are eligible to recover thousands of pounds, including overpaid interest and statutory interest on top. Some claims are worth £2,000 - £5,000 or more.
Which lenders are affected by the mis-selling investigation?
Major UK lenders including Black Horse (Lloyds), Santander UK, Close Brothers, Barclays (Clydesdale Financial Services), and FCE Bank (Ford Credit) have all been linked to commission based motor finance sales practices.
Is the Financial Conduct Authority involved?
Yes, the FCA has paused all complaint handling until December 2025 to assess industry wide liability. This follows a key Court of Appeal ruling and a Supreme Court hearing in the Johnson v FirstRand case.
How do I check if I qualify for a car finance claim?
If you took out car finance in the UK and weren’t told about commissions paid to the broker or dealer, you may be eligible. You can submit your car finance claim in under 60 seconds via our car finance claim checker Start your claim here
