What do the latest motor finance settlement updates mean for firms?

Today, 3rd November 2026, Barclays Partner Finance confirmed it will make early settlement offers to some motor finance customers this month. This announcement coincides with new FCA research showing that 89% of car finance customers who have complained, or are considering doing so, want the choice of receiving a compensation offer now rather than waiting for the legal challenges to conclude. Of those surveyed, 61% said they would accept an offer in line with the scheme.  
 

Where does this leave the motor finance redress scheme?

The wider position remains uncertain. Parts of the FCA’s motor finance redress scheme are suspended while legal challenges continue, with the hearing scheduled to take place between 16th February and 3rd March 2027. In the meantime, firms must continue preparing for the scheme and progressing complaints as far as possible, although they do not currently need to calculate or pay compensation under the scheme. 

What has changed is the emergence of a more defined route for firms that do not want to wait. The FCA supports lenders making voluntary settlement offers, provided customers are offered no less than they would receive through the current scheme and are given transparent information about the implications of accepting. 

What does the FCA expect from lenders making settlement offers?

Following Barclays Partner Finance’s announcement, the FCA has set out its minimum expectations for lenders choosing to make voluntary settlement offers while parts of the motor finance redress scheme remain suspended. 

For lenders making offers during this period, the key expectations include: 

• Be transparent about the FCA’s role and do not suggest that it has reviewed or approved an individual settlement offer 

• Give consumers at least one month to respond to an offer 

• Explain the context, including the introduction of the redress scheme and its subsequent partial suspension following legal challenge 

• Make clear that the offer is at least equal to the maximum redress available under the current scheme, calculated for the individual consumer under the applicable scheme methodologyExplain the consumer’s options, including accepting the offer now or waiting for the outcome of the legal challenge – and the potential implications of either choice 

• Spell out what a full and final settlement means, including the impact on the consumer’s existing complaint and entitlement to compensation under the current scheme 

• Show how the redress has been calculated, including the relevant arrangement, basis of liability, any set-off or caps, compensatory interest and tax deductions where applicable 

The FCA has also published a factsheet covering frequently asked questions about settlement offers under the motor finance compensation scheme. Lenders must share it with customers when making settlement offers. The regulator will also maintain a dedicated consumer page listing lenders making offers, helping customers check whether an offer is genuine. 

What should firms be thinking about now?

The Barclays Partner Finance announcement shows that some lenders may choose to move ahead with settlements rather than wait for the legal process to conclude. It is also apparent that the FCA will be watching how firms approach this. The regulator says it will closely monitor firms making offers, expects firms planning to make them to notify the FCA, and will update its website with details of lenders making settlement offers. 

For firms considering this route, the challenge will therefore extend beyond calculating redress. They will need to consider whether their complaints process, operations, customer communications, calculation methodology, quality assurance and resourcing are ready to support a fair and consistent settlement process at scale.