Barclays plans early car finance payouts as compensation scheme faces legal challenge

Barclays will offer early settlements to some customers affected by car finance mis-selling while legal challenges delay the Financial Conduct Authority’s proposed compensation scheme. The FCA supports voluntary offers provided customers are not offered less than under its proposed scheme. Barclays says it will use the regulator’s calculation method and contact eligible customers in the coming weeks.

The FCA expects only a minority of claimants to receive early offers. Customers can decline and wait, but accepting a full and final settlement removes them from the central scheme and ends further financial ombudsman involvement. They would keep their payment if the eventual scheme awarded less, but could not claim extra if it awarded more.

The dispute largely concerns undisclosed dealer commissions linked to customers’ borrowing rates. The proposed redress covers about 12 million loans, with average compensation estimated at £829. That scale makes settlement terms significant, while consumer representatives and lenders are challenging the scheme and a claimant’s solicitor has questioned whether early offers will be fair.