Barclays begins motor finance compensation payouts ahead of legal challenge

Summarised from 3 outlets · Updated 3 Nov, 10:30 · Archive

Barclays will this week start offering compensation to former motor finance customers using the FCA's redress scheme methodology.

Barclays will this week become the first major UK lender to offer compensation to former motor finance customers, ahead of legal challenges to a £9bn redress scheme. The bank will use the Financial Conduct Authority's redress scheme methodology for payouts, with acceptance optional for consumers.

The FCA has introduced minimum expectations for lenders wishing to settle early. The regulator said it supports settlement offers as long as customers receive no less than they would get through the scheme. Lenders cannot claim or imply that the FCA has vetted or endorsed their specific offer. Maximum payouts are calculated per agreement and capped at either a full commission refund or the total financing charges paid, plus statutory interest.

Once a consumer accepts a settlement, they cannot subsequently seek additional compensation. According to consultancy Broadstone, the FCA's reassurance may prompt other lenders to begin offering early compensation. The regulator will begin releasing the names of lenders making payouts before the case reaches the Upper Tribunal in February 2027. The FCA faces three challenges from the industry and one from advocacy group Consumer Voice to its redress scheme.

Barclays begins motor finance compensation payouts ahead of legal challenge — Image: This is Money

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How it is being reported

Barclays to offer early compensation payouts to motorists affected by car finance scandalCity watchdog launched its £9billion redress scheme for customers mis-sold motor finance earlier this year, estimating that they would receive an average of £829 each.This is Money · 3 Nov, 10:56
Barclays begins early motor finance payouts as FCA sets ground rulesBarclays will begin offering payouts to motor finance consumers ahead of the forthcoming legal battle after the City watchdog introduced its “minimum expectations” for lenders wishing to settle early. The bank said it would make payments using the Financial Conduct Authority’s (FCA) redress scheme methodology and acceptance would be optional. Once a consumer accepts the [...]City AM · 3 Nov, 10:13
Barclays to begin car finance payouts months before outcome of legal challengeBarclays will this week become the first major UK lender to begin offering compensation payments to former motor finance customers, even as the industry's big financiers face waiting months for the outcome of challenges to a £9bn redress scheme.Sky News Business · 2 Nov, 10:43

In this story: Barclays · Financial Conduct Authority · Consumer Voice · Upper Tribunal

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