Barclays Starts Car Finance Payouts Before Court
Average payout per mis-sold agreement
£829
Barclays' provision for mis-selling
£430m
Total industry compensation estimate
up to £9.1bn
Car loans covered by the FCA scheme
~12 million
Mis-selling period
Apr 2007 to Nov 2024
Barclays share of affected loans
not yet disclosed
Accept early or wait? Your two options
| Option | What you get | Risk | When |
|---|---|---|---|
| Accept Barclays' early offer | Money before Christmas 2026; uses FCA model; Barclays won't claw back if outcome is lower | Waive right to sue for more; forfeit any upside if scheme pays out higher later | This month |
| Wait for FCA scheme | Could receive more if legal challenge fails and scheme is upheld | Could receive less or nothing if scheme overturned; payment delayed to 2027 or 2028 | 2027 at earliest |
What is the car finance mis-selling scandal?
Between April 2007 and November 2024 many car dealers were paid discretionary commissions by lenders such as Barclays Partner Finance, Black Horse (Lloyds), Close Brothers and MotoNovo. The dealer could set the interest rate the buyer paid — and earn a higher commission by pushing the rate up. Customers were rarely told this was happening. The FCA banned the practice in 2021 and launched a review that resulted in an industry-wide compensation scheme. About 12 million of the 32 million car finance agreements made during the period are affected — roughly 37%. Average over-charge is estimated at £829 per agreement. The total cost to the industry, including admin, could reach £9.1 billion.
Am I eligible and what should I do?
You took out a car, van or motorbike loan between April 2007 and November 2024
You financed through a Barclays Partner Finance agreement
Wait: Barclays will contact affected customers directly over the next two weeks
Read the offer carefully — it will show how the £829 average was calculated for your deal
You have one month to accept or decline once you receive the offer
If you decline: you can still wait for the FCA scheme (hearing February 2027)
If you are with another lender: do not use a claims management firm; contact the lender directly or wait for the FCA scheme
"By making these early settlement offers we are giving some customers the option of receiving redress sooner rather than waiting for the legal challenges and any subsequent FCA action to conclude. Each offer will be calculated using the FCA's redress schem
"Barclays Partner Finance spokesperson
What other lenders are likely to do next
Barclays is the first major UK bank to break cover, but analysts expect others to follow quickly. Black Horse (Lloyds Banking Group), Close Brothers and MotoNovo (FirstRand) hold the largest exposures. Lloyds has set aside £1.1bn, Close Brothers £400m. The FCA confirmed it supports lenders making early offers as long as the amount is at least as high as what the central scheme would pay. Observers note that early offers let banks start clearing the liability from their balance sheets before the February 2027 court ruling. Those who receive an offer from a lender other than Barclays should apply the same accept-or-wait analysis — the FCA methodology applies across all participating lenders.
Sources. BBC Business (11:56 UTC 3 Nov 2026) and Guardian (13:34 UTC 3 Nov 2026) confirmed Barclays' early settlement announcement. FCA scheme details, £829 average and £9.1bn estimate from FCA redress scheme rules (June 2026). Barclays £430m provision from Barclays 2026 interim results. Other lender provisions from published financial statements. Legal challenge hearing date from FCA statement October 2026. Barclays Quote from BBC reporting of the spokesperson statement, 3 November 2026. Cover:
