Lloyds warns of greater hit from car loan finance scandal

Banking group had set aside 1.2bn for compensation but character' of City regulator's payout scheme could fuel bigger bill

• Car finance scandal: what does ruling mean and how much compensation could you get?

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Lloyds Banking Group has warned it is likely to take a greater hit from the motor finance scandal than originally expected, costing more than the 1.2bn it had set aside.

The City regulator said on Tuesday night that people who were mis-sold car finance are likely to receive compensation payouts averaging 700 from 14m unfair loans, less than the 950 payouts previously expected.