FCA Sets Conditions for Early Car Finance Compensation Offers

The UK Financial Conduct Authority (FCA) has set expectations for lenders making early compensation offers to car finance customers while legal challenges to its motor finance scheme continue. The regulator supports offers as long as they are no lower than the amount customers would receive under the scheme. Barclays Partner Finance has confirmed it will make offers to some customers owed compensation. The FCA said customers must be told clearly what accepting an offer means. They can keep the money even if the legal challenges ultimately mean the scheme would have paid less, but they cannot seek additional compensation later if the scheme would have paid more. Customers who decline an offer can leave their claim to be handled under the scheme. Accepted offers cannot be referred to the Financial Ombudsman Service for review. Research released alongside the guidance found that 89% of surveyed customers who had complained or were considering complaining wanted the choice of an offer now rather than waiting for the legal challenges to conclude. Of those surveyed, 86% said they would be comfortable deciding whether to accept, and 61% said they would accept an offer in line with the scheme. For 77%, receiving compensation sooner would make a great deal or a fair amount of difference to their financial situation. Kantar surveyed 1,000 motor finance customers online between 25 and 28 June 2026; these findings are based on the 590 who had complained or were considering doing so. The FCA has published a factsheet that lenders must share with customers when making offers and plans to update its website with the names of lenders making them, so customers can check whether an offer is genuine. Firms are expected to notify the regulator if they plan to make offers; not all lenders will do so, and some may approach only certain customers. The scheme is partially suspended pending legal challenges scheduled to be heard from 16 February to 3 March 2027. Customers concerned about a car finance agreement can complain directly to their lender for free; the FCA warns that law firms and claims management companies may charge up to 36% of compensation, including VAT.