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Some Barclays customers could receive a car finance compensation offer before the legal dispute over a central redress scheme is resolved. According to the BBC, Barclays Partner Finance plans to contact selected customers in the coming weeks. Accepting a settlement will be voluntary, but will rule out claiming a higher amount through the scheme later.
The announcement concerns offers, not payments already made. In its report on 3 November, the BBC says Barclays intends to calculate the proposed amounts using the methodology of the compensation scheme drawn up by the Financial Conduct Authority (FCA), the UK’s financial regulator. However, the scheme remains partly suspended because of legal proceedings, and its final form has not been settled.
An early settlement would close the case
The FCA, whose position is reported by the BBC, supports fair early settlements provided they do not leave customers worse off than under the proposed central scheme. However, the regulator expects only a minority of those seeking compensation to receive such offers. Customers do not have to accept them.
The key consequence is that a settlement would be final. Under the rules described by the BBC, someone accepting an early offer would keep the payment even if the eventual scheme provided for a lower amount. Equally, they would not be able to seek a top-up if the outcome of the legal proceedings meant they would otherwise have received more.
Accepting an offer would also mean being excluded from the central scheme and ending any further involvement in the case by the Financial Ombudsman Service, which handles customers’ complaints about financial firms. An early settlement is therefore not an advance payment towards a later award.
Why are customers seeking car finance compensation?
The issue concerns failings in car finance arrangements, particularly dealer commissions linked to the interest rate charged on a loan. Customers were often not told about these arrangements. According to the BBC, expected compensation covers around 12 million agreements made between April 2007 and November 2024 — about 37% of agreements from that period.
The estimated average compensation payment is around £829. That is not a guaranteed amount for each customer: individual awards are expected to vary. The scale of the proposed scheme also does not determine who will receive an early offer from Barclays.
The bank said not all customers whose complaints had been acknowledged on or before 1 October 2026 would receive an offer. It plans to contact selected customers directly, although the BBC report does not give individual contact dates.
Central scheme still subject to legal proceedings
A hearing at the Upper Tribunal, which considers appeals including those involving regulatory decisions, is scheduled for 16 February to 3 March 2027. The legal disputes mean the timing of payments under the central scheme remains uncertain.
The BBC assesses that payments through the scheme are unlikely until late 2027. That is a forecast, not a confirmed timetable. Barclays’ early offers would therefore allow some customers to settle without waiting for the final outcome — in exchange for giving up any potential top-up later.
