Barclays has confirmed it will start making early compensation offers to drivers in the car finance mis-selling case, according to a report by BBC Business. The offers come before a legal challenge to the Financial Conduct Authority's (FCA) proposed central compensation scheme, which is due to be heard from 16 February to 3 March.
Barclays said claimants would be contacted directly "in the coming weeks." It stressed that not all customers whose complaints were acknowledged on or before 1 October 2026 would receive an early offer. A Barclays Partner Finance spokesperson said each offer would be calculated using the FCA's redress scheme methodology. "We will clearly explain how it has been calculated and what accepting a full and final settlement means, so customers can decide whether accepting the offer is right for them," the spokesperson said.
The FCA said it would welcome lenders making settlement offers, as long as customers were not given a worse deal than under its central scheme. Stephen Braviner Roman, the FCA's general counsel and co-lead on the motor finance project, said: "Anyone who wants to wait can, and there's no obligation to agree to the offer. We'll closely monitor firms making offers and expect them to be clear what accepting an offer means."
The FCA said accepting an offer would mean the customer could not claim more later, even if the legal outcome would have paid more. It would also take the customer out of the scheme and stop any further input from the Financial Ombudsman. The regulator said it expects only a minority of claimants to receive early offers, with most waiting for the outcome of the court case. Compensation under the central scheme is unlikely to be paid until late next year.
The scheme covers millions of drivers who took out car loans between April 2007 and November 2024. The report says these loans were mis-sold, mainly because dealers received commission from lenders based on the interest rate charged, known as discretionary commission arrangements, and customers were often not told. The FCA expects average payouts of about £829 across about 12 million car loans, with compensation costing the industry up to £9.1bn, including administrative costs.
Consumer Voice said the proposed scheme left "too many people short-changed." Volkswagen Financial Services, Mercedes Benz Financial Services, and Credit Agricole Auto Finance are also challenging the scheme.