Martin Lewis has confirmed that thousands of motorists could receive early car finance compensation offers before the end of November, despite the wider redress scheme being delayed until next year.
The financial guru shared the update on this week's episode of The Martin Lewis Money Show Live, revealing that Barclays Partner Finance will become the first lender to offer early settlements to some customers affected by the car finance mis-selling scandal.
The offers will be calculated using the Financial Conduct Authority's (FCA) proposed compensation scheme, which has an estimated average payout of £830 per unfair car finance agreement. However, the amount people receive will depend on their individual circumstances, including how much they borrowed and when they took out the finance.
Why the wider scheme is delayed
Martin told ITV viewers that the FCA's mass redress scheme remains on hold because of four legal challenges, which are due to be heard in court from February 16 to March 3, 2027.
He said: "Even if the regulator wins and it all goes on as planned, payouts won't start until the end of 2027 and some will be into 2029, so it's not quick."
However, the regulator has given lenders permission to settle complaints early, provided they use the same compensation calculations as the proposed scheme.
Martin said: "Now, we didn't think this was going to happen, but the regulator said look if some firms want to pay out early and get some of this settled, they can."
Barclays Partner Finance has said it will. It's the first firm to send out early settlement offers.
Who qualifies for an early offer
Barclays Partner Finance, a trading name of Clydesdale Financial Services, has confirmed that it intends to issue all early settlement offers by November 30.
However, not everyone who has complained about car finance mis-selling will receive an offer.
Martin said: "For it to write to you, you must have put a complaint into it already by the first of October, but even if you did, it's not going to do it to everyone, it's not telling us who it is sending it to."
Only customers whose complaints were acknowledged by Barclays Partner Finance on or before October 1, 2026, will be considered. The lender has not disclosed which customers will be selected, although MoneySavingExpert estimates that the number of offers could be in the tens of thousands.
Customers who accept an offer will receive their compensation within one month, meaning payments should arrive by January 31, 2027, at the latest. Motorists who receive an offer this month will have one month to decide whether to accept or reject it.
What accepting an offer means
Martin stressed that accepting the money would represent a full and final settlement, meaning customers would not be able to reopen their complaint if compensation amounts subsequently increased.
He said: "It is a full and final settlement, it is a done deal."
The uncertainty surrounds the outcome of the legal challenges against the FCA's proposed scheme. Three car finance lenders, CA Auto Finance, Mercedes-Benz Financial Services and Volkswagen Financial Services, are challenging the regulator's plans. A fourth challenge, brought by Consumer Voice, is seeking higher compensation for affected motorists.
If the courts decide that payouts should increase, customers who have already accepted an early settlement will not be entitled to any additional money. However, if compensation levels are reduced, those who have already accepted an offer will not have to repay the difference.
Martin advised that accepting an early offer could be worthwhile for people who would prefer to receive their compensation sooner rather than wait for the outcome of the court cases. He also highlighted that some motorists have signed up with no win no fee claims companies, which can take a substantial proportion of any successful payout.
MoneySavingExpert has previously highlighted that legal fees for pursuing a claim through the courts can typically amount to 30 per cent of the compensation plus VAT. Martin has also revealed that 64 per cent of car finance customers responding to a poll he conducted said they would accept an early settlement based on the regulator's proposed calculations.
Options for those who reject or miss out
Customers who decide against accepting an early offer will retain the option of pursuing compensation through the FCA's mass redress scheme, provided it receives the go-ahead following the legal challenges. If the scheme does not proceed, motorists could still pursue complaints directly with their lender and potentially take their case to the Financial Ombudsman Service or the courts.
However, there is no guarantee that waiting will result in a higher payment. The FCA has said its proposed compensation scheme is intended to provide a simpler route to redress than taking individual legal action, where fees could reduce the amount motorists ultimately receive.
Anyone who previously had a car finance agreement with Barclays Partner Finance but has not yet submitted a complaint will not qualify for its early settlement offers. However, they can still complain to the lender and potentially receive compensation through the wider scheme if it proceeds.
Motorists who have complained but do not receive an offer this month should not assume they are ineligible for compensation. Other lenders may also decide to make early settlement offers while the FCA's wider redress scheme remains on hold. Further information about the early settlement arrangements is available on the MoneySavingExpert website.
