The UK financial watchdog confirmed on Monday night that millions of motor finance customers should receive larger compensation under a scheme for those affected by misselling.
An average of £830 compensation is expected this year, the Financial Conduct Authority said, for people treated unfairly by firms who broke the law by failing to disclose important information.
The average payout was increased from an expected average £700 per payout when the regulator issued its first calculations in October.
The FCA now estimates that 75% of eligible consumers will make a claim (down from 85% in the original consultation), in which case total redress paid would now be £7.5 billion.
Lloyds Banking Group PLC (LSE:LLOY) said this morning that: "The details of the final scheme differ from the scheme as laid out in October 2025 and require careful analysis. Accordingly, the group is assessing the implications and impact of the final rules. The group will update the market as and when appropriate."
Last night, Close Brothers Group PLC (LSE:CBG) said it would also be "assessing the potential implications of the redress scheme on the group".
Analysts at Jefferies said investors should "look past the headlines".
While the FCA's estimate that lenders will pay £7.5 billion of commissions back to customers is 9% below its estimate in October's consultation paper, many of the aggregate-level assumptions have changed, "transposing this onto individual bank loss assumptions is a little pointless".
The analysts said: "One would hope that a bank like Lloyds would have struck its firm-specific provision taking most, if not all, of this into account."
When it made its original £1.95 billion provision, Lloyds was clear at the time that the heaviest weighting was applied to a scenario in which there were no changes.
"In conclusion, we are relaxed," the Jefferies analysts said. "We are hesitant to draw firm conclusions given the complexity and, besides, we should find out soon what Lloyds thinks. But our initial view is that it is difficult to see how these final rules will lead to any material increase in their provision, and over time may allow for a modest release."
Shares in Lloyds were up 1.7% on Tuesday, with Close Brothers rising 2.7%.
Barclays PLC (LSE:BARC), which has some exposure, was up 1.3%, as was Vanquis Banking Group PLC (LSE:VANQ).