Santander has confirmed it will pay out £830 to certain customers as part of the Financial Conduct Authority (FCA) redress scheme for mis-sold motor finance. The bank has decided to opt into the scheme rather than challenge it, meaning those who took out an affected deal with Santander will be eligible for the compensation once ongoing legal challenges are cleared.
FCA scheme covers 12.1 million deals
The FCA is overseeing a longstanding compensation scheme for drivers who took out motor finance later found to have been mis-sold. Earlier this year, the regulator unveiled the scheme after ruling that approximately 12.1 million finance deals were mis-sold by various lenders between 2007 and 2014.
According to Money Saving Expert, a total of £7.5 billion is set to be paid out across the 12.1 million deals involving Discretionary Commission Arrangements (DCAs), which have since been banned. DCAs allowed car dealers and brokers to increase interest rates on loan deals and pocket the difference, but the borrower was not made aware of how the interest rate had been inflated.
Payouts delayed to 2027
The financial redress scheme is still open for applicants to apply for a share of the cash, and the money is expected to be all paid out by the end of 2027. However, initial payments have been delayed from this year into 2027 following legal challenges.
The average payout had originally been pegged at £700, but has now been revised upwards to £830 per affected customer. This is because roughly two million deals which were initially included in the scheme have now been excluded.
Santander opts in
MSE reports: “The redress scheme – originally planned to start in July 2026 – is now likely delayed until at least 2027 following legal challenges. While the court process continues, you should still get your complaint in now if you haven't already, as this should help you get any compensation more quickly once the scheme begins.”
A spokesperson for Santander said: "We have decided not to challenge the schemes and will now focus on their implementation. This was a finely balanced judgment reflecting our primary desire to bring greater certainty to our customers, shareholders, and the wider motor finance sector—factors which outweighed our disagreement with elements of the proposed schemes."
