Bank of Ireland hikes UK motor finance scandal provision to £350m

Bank of Ireland Group has set aside £350 million to compensate customers in the UK who were mis-sold car finance loans, more than double its previous estimate.

The firm’s provision had previously been £143 million, which was based on probability weighted scenarios.

However, Bank of Ireland Group has today said that based on the Financial Conduct Authority’s (FCA) proposed industry-wide redress scheme, it had increased that to around £350 million (over €400m).

It attributed the hike to the “increased likelihood of a higher number of eligible cases, the construct of the proposed redress methodology and the customer engagement approach”.

The FCA estimates lenders could pay out £8.2 billion in compensation, with eligible customers receiving around £700 each on average.

In a statement issued today, Bank of Ireland said it “does not believe that the FCA’s proposed redress methodology reflects the actual loss to customers or achieves a proportionate outcome”.

It added that the group “is committed to achieving a fair outcome for customers and ensuring that appropriate redress is provided”.