Barclays will make early compensation offers to drivers in the car finance mis-selling case, the BBC reports. The Financial Conduct Authority (FCA) said it would welcome lender settlement offers as long as customers do not get a worse deal than under its proposed central scheme.
Barclays said it would contact claimants directly "in the coming weeks." Not all customers who complained by 1 October 2026 will receive an early offer. The FCA said it expects only a minority of claimants to receive early offers, with most waiting for the outcome of next year's court case.
The FCA's central scheme faces a legal challenge, with a hearing scheduled from 16 February to 3 March at the Upper Tribunal. Compensation under that scheme is unlikely to be paid until late next year. Three lenders, Volkswagen Financial Services, Mercedes Benz Financial Services and Credit Agricole Auto Finance, are also challenging it.
The FCA said lenders must make clear that accepting an offer means drivers can keep the payment even if the final scheme pays less, cannot claim more later, and leave the scheme with no further input from the financial ombudsman. The regulator has published a factsheet and will publish a list of lenders making early offers.
The scheme covers drivers who took out car loans between April 2007 and November 2024 and were affected by discretionary commission arrangements, under which dealers received commission based on the interest rate charged, often without the customer being told. The FCA expects average payouts of about £829 across about 12 million loans, with total industry costs of up to £9.1bn including administrative costs. Consumer Voice said the proposed scheme leaves "too many people short-changed."