The Financial Conduct Authority (FCA) has set expectations for lenders making early motor finance settlement offers while legal challenges delay its compensation scheme. Offers must provide no less than customers would receive under the scheme. Barclays Partner Finance has confirmed it will make offers to some customers owed compensation. FCA research found that 89% of customers who had complained or were considering doing so wanted the option of receiving an offer rather than waiting for the litigation to conclude. Lenders must explain that customers accepting an offer would keep their payment even if the legal outcome meant they would otherwise receive less, but could not claim more if the outcome increased compensation. Customers can reject offers and leave their claims to be handled under the scheme. The offers cannot be referred to the Financial Ombudsman Service for review. Lenders must share the FCA’s consumer factsheet when making offers and are expected to notify the regulator of plans to offer settlements. The scheme remains partially suspended pending legal challenges scheduled to be heard between Feb. 16 and March 3, 2027. Lenders must continue preparing for the scheme and progressing complaints as far as possible, but do not need to calculate or pay compensation under it until the legal process concludes.
UK FCA sets expectations for motor finance settlement offers while compensation scheme faces legal challenges
The UK Financial Conduct Authority expects early motor finance settlement offers to pay at least what customers would receive under its contested compensation scheme. Customers accepting offers keep their payments even if the legal outcome reduces compensation, but cannot claim more if it increases. Customers may reject offers and await the scheme, but the offers cannot be reviewed by the Financial Ombudsman Service.