Lloyds shares jumped on Monday as investors reacted to a favourable Supreme Court ruling and an FCA redress scheme that was unlikely to require Lloyds to stump up much more cash to cover.
The Supreme Court overturned the Court of Appeal’s decision in Wrench, Johnson and Hopcraft on 1 August 2025, ruling that motor dealers acting as credit brokers do not owe fiduciary duties to customers and that commission payments do not constitute bribery.
This was a major relief for shareholders who were staring down the barrel of potentially billions in redress.
However, the Court confirmed that unfair relationships under the Consumer Credit Act 1974 require highly fact-sensitive assessments of all relevant circumstances, awarding Mr Johnson a commission refund plus commercial interest as a remedy for proven unfairness in his specific case.
Despite the Supreme Court’s clarification, a level of uncertainty remains that affects Lloyd’s provisioning approach. Motor financing redress could still cost the bank huge sums.
The FCA announced it will publish a consultation on an industry-wide redress scheme by early October, covering discretionary commission arrangements and potentially other non-DCA arrangements.
However, Lloyds currently believes any provision changes are unlikely to be material, meaning they will not have to set aside more cash.
Lloyds investors cheered the news and shares surged over 6% in early trade on Monday.