Bank of Ireland hikes car finance mis-selling provision
By Abigail Townsend
Date: Monday 20 Oct 2025
(Sharecast News) - Bank of Ireland Group has set aside £350m to compensate customers who were mis-sold car finance loans, more than double its previous estimate.
The firm's provision had previously been £143m.
However, on Monday the lender - Ireland's biggest - said that based on the Financial Conduct Authority's proposed industry-wide redress scheme, it had increased that to around £350m.
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".
Earlier this month, the FCA said the industry would need to pay out between £8.2bn and £9.7bn in compensation, with eligible customers receiving around £700 each on average.
It followed a lengthy investigation, including legal challenges, into how car finance loans were marketed and sold. The regulator found that the commission paid by lenders to dealerships incentivised higher interest rates and were not sufficiently disclosed to consumers.
The FCA's proposals remain subject to consultation, and so may change. However, based on current assumptions, the £350m provision is expected to reduce Bank of Ireland's 30 June 2025 CET1 ratio of 16% by around 35 basis points.
Bank of Ireland said: "The group is committed to achieving a fair outcome for customers and ensuring that appropriate redress is provided.
"However, the group does not believe that the FCA's proposed redress methodology reflects the actual loss to customers or achieves a proportionate outcome.
"In addition, the FCA's proposed approach for assessing unfairness does not align with the legal clarity provided by the recent UK Supreme Court judgement. The group will engage with the FCA on this basis."
Other lenders who have put aside money to compensate customers include Lloyds Banking Group, Close Brothers, Barclays and the UK arm of Spain's Santander.
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