Britain’s Financial Conduct Authority (FCA) says early car finance settlement offers should match or exceed compensation under its challenged scheme, giving some customers a chance to receive money before litigation ends.
The scheme addresses motor finance agreements in which lenders did not adequately disclose arrangements with brokers. Some arrangements let brokers increase a customer’s interest rate to earn a higher commission. The FCA estimates that about 12.1 million agreements, or 37% of those made from April 6, 2007, to Nov. 1, 2024, are eligible under the scheme.
The regulator estimates an average of about £830 per agreement that receives compensation, although individual amounts will vary. Lenders making early offers must give customers an FCA factsheet explaining the consequences of accepting.
A customer can decline an offer and wait for the complaint to be resolved. Accepting settles the same complaint: the customer keeps the payment if the scheme later provides less, but cannot seek more if it provides a higher amount. The Financial Ombudsman Service cannot review an early settlement offer.
The FCA has identified Barclays Partner Finance as planning offers for some customers. In its third-quarter filing, Barclays PLC said it was considering early payments to some eligible customers before the tribunal hearing. Barclays PLC reported a £430 million motor finance provision as of Sept. 30, 2026.
Kantar surveyed 1,000 motor finance customers online from June 25 to 28, 2026. Among the 590 who had complained or were considering a complaint, the FCA said 89% wanted the choice of an early offer and 61% would accept one in line with the scheme. The FCA said 77% believed getting compensation sooner would make a substantial or moderate difference to their finances.
Lenders must continue preparing for the scheme and advance complaints where possible, though they need not calculate or pay compensation under it until the legal process ends. The FCA expects scheme payments to begin in 2027 if it is upheld without an appeal. The Upper Tribunal is scheduled to hear the challenges from Feb. 16 to March 3, 2027.
