The FCA has said it supports car finance lenders making settlement offers to customers owed compensation, provided each offer is no less than the redress scheme would pay. Barclays Partner Finance confirmed the same day that it will make early offers to some of its customers.
What the FCA published
On 3 November the regulator released a Kantar survey of 1,000 motor finance customers, run online between 25 and 28 June 2026, alongside its expectations for lenders that want to make offers while legal challenges to its compensation scheme continue. The findings it cites come from the 590 respondents who had complained or were considering a complaint. Of those, 89% want the choice of an offer now rather than waiting for the challenges to conclude, 86% would be comfortable making the decision and 61% say they would accept an offer in line with the scheme. In the same group, 77% say receiving compensation sooner would make a great deal or fair amount of difference to their finances.
Stephen Braviner Roman, the FCA’s general counsel and co-lead on the motor finance project, said: “Fair settlement offers could result in some people getting money sooner. And it’s clear they want the choice.”
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What an offer has to contain
The FCA’s minimum expectations for settlement offer letters read as a checklist for compliance teams. The letter should give the consumer at least one month to respond. It should explain that the amount is at least equal to the maximum redress available under the scheme, and it should say that the FCA has not reviewed the terms of the individual offer. It should also describe the scheme’s partial suspension, point to the FCA’s frequently asked questions, and set out what accepting a full and final settlement means.
Three consequences of acceptance carry the most weight. A customer who accepts keeps the money even if the legal outcome would have paid less, and cannot claim more later if it would have paid more. The existing complaint will ordinarily be treated as withdrawn. A customer who declines can wait for the outcome but cannot, at this stage, refer the offer or the underlying complaint to the Financial Ombudsman Service.
The appendix to the letter has to show the work. The FCA lists the type of arrangement investigated, the basis of liability found, and the amount payable with its calculation, including any set-off or caps, compensatory interest and income tax deduction. Lenders must also demonstrate that the offer is no less than the maximum redress available under CONRED 5/6.4. Firms are expected to notify the FCA if they plan to make offers, and the regulator says it will publish a list of lenders making them so customers can check that an offer is genuine. It adds that not all lenders are likely to make offers, and those that do may make them only to some customers.
Barclays Partner Finance goes first
Barclays Partner Finance said in its own announcement that offers will go to some customers whose commission complaints were acknowledged on or before 1 October 2026. Not every customer in that group will receive one. Each offer is calculated with the FCA’s redress scheme methodology and customers will be contacted in the coming weeks. They get a month to accept or reject, a timetable Barclays says allows accepted offers to be processed and paid before the Upper Tribunal hearing in February.
Barclays Partner Finance says it will not ask customers who accept to repay any of the settlement if the final outcome would have entitled them to less. Customers who decline or do nothing will hear after the legal challenges and any later FCA action conclude, and the company says they could be entitled to a larger offer, a smaller offer or, in some cases, none. The company notes that Clydesdale Financial Services Limited, which trades as Barclays Partner Finance, left the motor loan sector in 2019.
The legal clock
The scheme is partially suspended after challenges from three lenders, Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance, and from Consumer Voice, represented by Courmacs Legal. According to the FCA’s statement on the hearing, the Upper Tribunal will hear the challenges between 16 February and 3 March 2027, with a judgment expected in the following months. Until then lenders do not need to calculate or pay compensation under the scheme, though they must keep preparing for it and progress complaints as far as possible.
The same statement tells lenders to plan for the case where the scheme or parts of it are quashed. There would then be no compensation scheme and no pause on complaint handling, so complaints would run through the usual process and statutory timescales. The FCA expects lenders to plan rigorously for that outcome, make the necessary financial provisions and engage with their auditors.
What it means for the finance leader
For a lender, an offer converts an open-ended liability into a number and a date. The FCA’s rule that an offer must be at least the maximum scheme redress means the lender pays the scheme’s top figure for that customer, and in return the customer’s claim under the scheme ends. In our reading, that makes the offer a pricing decision about legal risk. A lender expecting the tribunal to cut or quash the scheme is giving up that upside on every accepted offer, while one expecting the scheme to stand is buying certainty and operational relief.
Finance teams at lenders with motor finance books have three jobs this quarter. The first is to model provisions under both branches the FCA describes: a scheme that survives and one that is quashed. The second is to check that the redress engine can produce the calculation appendix the FCA lists, with set-off, caps, interest and tax treatment shown per agreement, because an offer letter without it falls short of the minimum expectations. The third is to schedule acceptances against the February hearing, since Barclays Partner Finance has built its one-month window around that date.
For customers, the FCA’s advice stays the same: complain directly to the lender for free, because a claims management company or law firm may charge up to 36% of any compensation. Earlier FinTech Edition coverage of the regulator’s consumer-facing work includes its call for AI providers to add disclaimers to financial advice, and of lender consolidation the completion of the Liberis and Qred merger after Swedish regulator approval.
Watch the FCA’s published list of lenders making offers. It will show how many other lenders follow Barclays Partner Finance before the February hearing.
Source: FCA
