Barclays will this week become the first major UK lender to begin offering compensation payments to former motor finance customers, according to Sky News reporting, even though the wider industry redress scheme remains partly suspended pending a legal challenge. The bank is drawing up plans to write to a limited pool of borrowers within days to set out their offers, sources told Sky News.

The recipients would account for a small proportion of Barclays’ total £430 million mis-selling bill. The move relates mainly to so-called Johnson cases, involving undisclosed commission arrangements.

Why the wider scheme is stalled

The Financial Conduct Authority announced a redress programme earlier this year covering an estimated 12.1 million car finance agreements taken out between 2007 and 2024, with payouts averaging £829 each under the scheme. Parts of the scheme, worth about £9.1 billion in total, were suspended after the Upper Tribunal ordered a suspension following four legal challenges to the FCA’s final rules. Challenges by finance arms including Volkswagen and Mercedes-Benz, as well as Consumer Voice and Crédit Agricole, are due to be heard by the Upper Tribunal in February 2027.

What happens next

Major banks including Barclays, Lloyds Banking Group and Santander UK considered lodging legal challenges but ultimately decided not to proceed. Barclays flagged the possibility of swifter settlements in its recent third-quarter results statement, saying such a move would be within the scope of its existing provision estimate. Industry sources said the FCA planned to set out on Tuesday its expectations for lenders making settlement offers outside the scheme. Barclays and the FCA declined to comment further on the reports, so the offers remain reported plans, not yet confirmed payments.

Sources: Sky News via Bro Radio, 2 November 2026; The Sun, 2 November 2026.