Vanquis warned of a hit as high as £7m for the motor finance scandal.

Vanquis Banking Group has warned it may be forced to hike provisions for the motor finance scandal to £7m if the financial watchdog does not switch lanes on its redress scheme.

The specialist lender said it recognised a £3m provision in its third-quarter results , which follows the Financial Conduct Authority (FCA) pledging an industry-wide redress scheme for car mis-selling.

But the bank cautioned if the watchdog does not change direction it may be forced to record an extra £4m provision “primarily due to increased operating costs associated with customer outreach”.

The FCA laid out the foundations for its industry-wide redress last month, where lenders are expected to be on the hook for £11bn.

Vanquis said it

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