Barclays to offer early car loan compensation in Britain — The Guardian

British bank Barclays will begin offering early compensation this month to tens of thousands of customers who said they were mis-sold car loans. Some of those who accept the offer could receive money before Christmas, The Guardian reports.

Barclays became the first major lender in the UK to start offering such payments amid a legal dispute over an industry-wide compensation scheme. The matter concerns financing for the purchase of new and used cars, motorcycles and vans: borrowers may have overpaid because of commission payments between lenders and car dealers.

Terms of the early settlement

Barclays Partner Finance will contact customers who have already filed complaints and offer them an early final settlement. The bank will calculate the amounts using the model of the UK Financial Conduct Authority (FCA). Under the current rules, the offer must be no less than the compensation a customer would receive under the disputed scheme.

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Customers will be given one month to accept or reject the offer. Those who agree will not be able to seek additional compensation in the future, file new complaints or bring claims concerning the commission under the relevant loan agreement. Barclays Partner Finance said it would not require customers to return part of the payment if the final decision provides for lower compensation.

Legal dispute over the FCA scheme

In March 2026, the FCA announced a £9.1 billion compensation scheme for millions of people affected by the car finance situation. The regulator initially expected the average payment to be £829. The most common category of agreements allowed a dealer or broker to increase the customer's interest rate in order to receive a higher commission.

Due to legal challenges, the FCA has partially paused the scheme, and a hearing in the case is scheduled for February 2027. If the regulator successfully defends its scheme, payments could begin in 2027. In the event of an appeal or a partial or full cancellation of the scheme, compensation may be delayed until 2028 or later. Barclays has set aside £430 million in connection with possible car loan payments.