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Barclays to compensate customers over mis-sold car finance deals
Barclays is to offer compensation to tens of thousands of customers who complained about mis-sold car finance, becoming the first major UK lender to make payouts while a legal challenge to the industry scheme continues. The early offers could put money in some customers’ accounts before Christmas, but accepting means giving up the right to seek further compensation or bring related claims.
The Financial Conduct Authority announced a £9.1bn scheme in March, covering loans taken out from 2007 to 2024 where commission arrangements between lenders and dealers led drivers to be overcharged. Barclays will calculate offers using the FCA’s model, and customers will have a month to decide; accepting offers must be at least as much as the scheme would provide. If the legal challenge succeeds, those who wait could receive more, less or no compensation, with payments potentially delayed until 2028 or later.
In short
- Barclays will offer early payouts to customers who complained.
- Offers use the FCA’s compensation model and must meet scheme levels.
- Waiting could bring more, less or no money, depending on the court case.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Barclays’ early offers could give affected customers money sooner, with the FCA’s model providing a defined minimum and avoiding years of uncertainty. For people who value prompt resolution, accepting may be a practical choice, particularly since a successful legal challenge could leave those who wait with less or no compensation.
The case against
Customers may reasonably hesitate because accepting an offer gives up the right to seek further compensation or bring related claims. Waiting could lead to a larger payout if the legal challenge succeeds, and the scheme’s calculation may not reflect every customer’s circumstances; the trade-off is the risk of delay and an uncertain outcome.
Explained simply
Car finance lets people spread the cost of buying a car through a loan, often arranged at the dealership. In some deals, the lender paid the dealer commission for arranging the loan, and the amount could depend on the interest rate set for the customer. The Financial Conduct Authority (FCA), which regulates financial firms in the UK, found that some commission arrangements meant drivers paid more than they should have.
The FCA’s proposed compensation scheme covers loans taken out from 2007 to 2024. Barclays is one of the lenders involved, while the FCA sets the scheme’s rules and a legal challenge could affect how much people receive. Customers offered compensation face a choice: accepting an offer gives up the right to seek more through related claims, while waiting leaves the amount and timing uncertain.
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Originally published by The Guardian as “Car finance: Barclays becomes first big lender to offer payouts for mis-selling of loans”.