Barclays to offer early car finance mis-selling settlements

Barclays Partner Finance has confirmed it will make early settlement offers to some customers affected by the motor finance mis-selling scandal. The move comes while a legal challenge to the Financial Conduct Authority's (FCA) mass redress scheme is on hold until at least February 2027.

Settlement Details

Barclays Partner Finance plans to make all early settlement offers before the end of November 2026. According to the company, these offers are intended to give customers the option of receiving redress sooner rather than waiting for legal challenges and subsequent FCA action to conclude.

Key details regarding the offers include:

• Eligibility: Only some customers whose complaints were acknowledged by Barclays Partner Finance on or before 1 October 2026 will receive an offer.
• Calculation: All offers will be calculated using the compensation methodology set out by the FCA.
• Timeline: If an offer is accepted, Barclays Partner Finance will pay out the redress within one month, meaning the latest customers should receive compensation is 31 January 2027.
• Finality: Accepting an offer constitutes a "full and final settlement," meaning the complaint will be closed and cannot be reopened.

Legal Challenges and the FCA Scheme

The FCA's proposed mass redress scheme is currently facing legal challenges. The UK's Upper Tribunal has scheduled the hearing for these challenges to take place between 16 February and 3 March 2027. Consequently, payouts under the official scheme are unlikely to begin until late 2027 at the earliest.

According to the FCA, the scheme is likely to be simpler and more certain than taking a claim to court. The challenges to the scheme involve several parties:

• Consumer Voice: An organization aiming to increase payouts for drivers.
• Lenders: CA Auto Finance, Mercedes-Benz Financial Services, Volkswagen Financial Services, and Credit Agricole Auto Finance are also challenging the scheme.

Impact on Consumers

Martin Lewis, founder of MoneySavingExpert.com, noted that while early offers provide immediate money, there is a risk for those who accept. One of the four legal challenges is asking for compensation to be increased; if that challenge succeeds, those who accepted early settlements would not receive the increased amount.

Estimates regarding the scale of the issue include:

• Average Payout: Consumers are expected to receive an average of approximately £830 per unfair car finance agreement, though exact amounts vary.
• Total Cost: Compensation is expected to cost the industry up to £9.1bn, including administrative costs.
• Affected Loans: Approximately 12 million car loans—about 37% of the total number during the period between April 2007 and November 2024—are expected to be eligible for compensation.

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Sources

• moneysavingexpert.com: Barclays to offer EARLY car finance mis-selling payouts
• bbc.com: Drivers may get compensation offers before car finance saga ends

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.