Drivers may receive compensation offers from lenders before a legal dispute over the car finance mis-selling scandal concludes, the Financial Conduct Authority said.
Barclays has confirmed it will make early settlement offers starting in coming weeks. The FCA said it welcomes such offers as long as customers receive no worse terms than under its proposed central compensation scheme, which faces a court hearing in February with payouts unlikely until late next year.
The FCA expects only a minority of claimants to receive early offers, with most waiting for the legal outcome. Stephen Braviner Roman, the FCA's general counsel, said customers who accept offers have a choice and face no obligation. "Anyone who wants to wait can, and there's no obligation to agree to the offer," he said.
Millions of drivers who took out car loans between April 2007 and November 2024 are entitled to compensation after lenders failed to disclose commission arrangements with car dealers. Average payouts are expected to reach £829 across about 12 million loans. Total industry costs, including administration, could reach £9.1bn.
Customers accepting early offers will receive full and final settlement, cannot claim more later if the legal challenge results in higher payouts, and exit the FCA scheme and ombudsman process. The FCA has published a factsheet to help drivers decide whether to accept early settlements and will publish a list of lenders making offers to prevent fraud.