Barclays looks set to become the first UK bank or lender to start offering payouts to motorists owed car finance compensation, with millions of pounds to be handed back.
According to Sky News, Barclays could make payouts available to a small number of borrowers, with offers possibly sent out to road users within days. The value would account for a small amount of Barclays' total compensation bill, which will sit at around £430 million.
Early payouts before legal challenge finalised
The decision could see money paid to some drivers before a legal challenge around the make-up of the compensation is finalised. Earlier this year, the Financial Conduct Authority (FCA) confirmed plans for a £9 billion redress scheme.
However, the decision was contested by a range of parties including some car manufacturers, with a legal review expected to conclude in February 2027. According to Sky News, Barclays are only hoping to settle the "slam-dunk cases" with their initial payouts.
Barclays statement on third-quarter results
Barclays addressed the possibility of early payouts in their recent third-quarter results statement. The bank said: "In [the third quarter of] 2026, the Upper Tribunal ordered a suspension of parts of the redress scheme following four legal challenges to the FCA's final rules. The legal challenges are to be heard by the Upper Tribunal in [the first quarter of 2027]."
"These challenges will delay and may otherwise affect the implementation of the redress scheme, although the FCA has indicated a willingness to consider how, despite such challenges, firms may be able to pay redress in line with its proposed scheme to certain cohorts of eligible customers in advance of the Upper Tribunal hearing."
"Barclays is considering this option, which would be within the scope of its existing provision estimate."
Average payout and eligibility
Although details are limited, the FCA has previously suggested that the average payout would be in the region of £830 per driver. Compensation could be owed to drivers after it was concluded that motorists had been misled over undisclosed or hidden commission fees.
Hidden commission charges may have been paid by road users who picked up a car on finance between April 2007 and November 2024. The Express has contacted Barclays for further comment.
