Drivers may get compensation offers before car finance saga ends

Image source, Getty ImagesByKevin PeacheyCost of living correspondentPublished3 November 2026, 09:45 GMTUpdated 3 minutes agoDrivers may be offered compensation from lenders ahead of the next legal battle in the car finance mis-selling saga.

Regulator the Financial Conduct Authority (FCA) said it would welcome lenders making settlement offers as long as customers were not given a worse deal than under its proposed central scheme.

That scheme is facing a legal challenge, to be heard in February, with resulting compensation unlikely to be paid until late next year.

But Barclays has confirmed it will make early compensation offers from now, with others expected to follow suit.

The FCA said it would still only expect a minority of claimants to be made early offers, with most having to wait for the outcome of next year's court case.

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. It's clear they want the choice.

"Anyone who wants to wait can, and there's no obligation to agree to the offer. We'll closely monitor firms making offers and expect them to be clear what accepting an offer means."

The vast majority of new cars, and many second-hand ones, are bought with finance agreements. Customers pay an initial deposit to secure the vehicle, then a monthly fee with interest.

But millions of drivers who took out a car loan between April 2007 and November 2024 will be entitled to compensation after the loans were mis-sold.

They mostly related to when car dealers received commission from lenders, based on the interest rate charged to the customer. These were known as discretionary commission arrangements (DCAs) and customers were often not told about them.

Average compensation payouts of about £829 are expected to be made related to about 12 million car loans - about 37% of the total number during the period.

Compensation will cost the industry up to £9.1bn, including administrative costs. Individual payouts will vary, depending on the degree of harm each driver faced.