Lloyds Banking Group PLC (LSE:LLOY) shares risk further pressure until clarity surfaces on the Financial Conduct Authority’s motor finance commission probe and redress, analysts say.
Following a spate of updates surrounding the investigation this week, Jefferies analysts noted investors would “understandably” be drawn to stocks seen as less exposed.
“Clarity will only be achieved once the FCA announces the design of its redress scheme,” analysts said in a note, “which may be well into next year”.
“Understandably, this will continue to push investors away from Lloyds to easier stories like NatWest.”
Santander on Wednesday became the latest to unveil a provision relating to the probe.
Some £295 million for possible motor finance commission compensation claims had been set aside, results showed.
FCA proposals to allow lenders longer to handle complaints surrounding agreements involving non-discretionary arrangements were then unveiled on Thursday.
Close Brothers separately firmed up plans to appeal an October ruling, finding it and Lloyds potentially liable to billions in compensation, in the Supreme Court.
Jefferies said the FCA move showed it was considering options, including awaiting whether the Supreme Court would hear the case, for which firms had until Friday to submit.
Lloyds’ redress costs were estimated at £2.5 billion by Jefferies, which analysts said reflected around 75% of all commissions paid in 2007-2020.
Lloyds shares fell 1.8% on Friday, having dropped 12.9% in the past month.