Barclays Partner Finance, the bank's finance arm, has announced it will offer early pay-outs to some motorists who were mis-sold car finance. The move comes as customers await the outcome of a legal challenge to a redress scheme launched this year.
Background to the redress scheme
In 2024, the Financial Conduct Authority (FCA) determined that since 2007 many motor finance lenders had not been properly telling customers important agreement information. This year, the FCA launched a redress scheme estimated to give £9 million in compensation to around 14 million people impacted, but a legal challenge means a judgment isn't expected until next year.
Barclays Partner Finance announced this week that some customers won't need to wait until proceedings are over. Those whose complaints were acknowledged on or before October 1 this year will receive an early settlement offer. The firm says the offer will be calculated using the FCA's redress scheme methodology to "reflect individual circumstances of each agreement".
How the early settlement offer works
Barclays confirmed customers or their representatives will be contacted "in the coming weeks" but that acceptance is optional. They will be told how the offer has been calculated and then given a month to accept or reject it. The timing means offers can be processed and paid before the legal challenge in February.
Accepting the offer means customers can't seek additional compensation in future, but Barclays will not ask them to repay the settlement if the final outcome would have been less. Those who reject or don't respond will be provided with information following the legal challenge's conclusion, but they may be entitled to a larger, smaller or no offer at that time.
Legal challenge timeline and statement
The challenge is due to be heard between February 16 2027 and March 3 2027, with a result expected in the following months.
A Barclays Partner Finance spokesperson said: "We recognise that some customers have already faced a considerable wait for an outcome of their motor finance complaints. 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 own redress scheme methodology. We will clearly explain how it has been calculated and what accepting a full and final settlement means, so customers can decide whether accepting the offer is right for them."
