BMW's UK motor finance business has set aside £611.6 million for potential compensation under the Financial Conduct Authority's motor finance redress scheme [1], as the financial impact of historic commission complaints continues to grow.

Newly filed accounts for BMW Financial Services (GB) Limited show the provision had increased substantially by the end of December 2025. The company had set aside about £207 million at the end of the previous year.

The higher provision contributed to BMW's British motor finance arm reporting a £139.3 million pre-tax loss for 2025, compared with a £39.1 million profit in 2024.

BMW has warned that its eventual cost could still be "materially different" because of uncertainty surrounding the FCA scheme and the legal challenges now before the Upper Tribunal.

The figures make BMW one of the lenders with a substantial financial exposure to the wider car finance scandal, although the £611.6 million should not be treated as a confirmed amount that will ultimately be paid to customers.

BMW's car finance provision rises above £600m

BMW Financial Services (GB) increased the amount set aside for the FCA compensation scheme by more than £400 million during 2025 [2].

By the end of December, its provision stood at £611.6 million after around £8 million of the provision had been used during the year.

The accounts also reveal a separate £25.5 million provision relating to agreements that fall outside the FCA's scheme but where BMW believes there remains a risk of future customer complaints and legal claims.

That £25.5 million is separate from the £611.6 million scheme provision and should not simply be added to it and described as FCA car finance compensation.

Both figures are accounting estimates intended to recognise potential future liabilities. They do not establish how many individual BMW car finance claims will ultimately qualify or what each customer could receive.

BMW finance arm moves from profit to loss

The growing provision had a significant effect on BMW Financial Services (GB)'s financial results.

The business recorded a pre-tax loss of £139.3 million in 2025 after making a £39.1 million pre-tax profit the previous year.

The shift illustrates the financial significance of historic motor finance commission complaints for some of Britain's largest vehicle lenders.

BMW's provision is now similar in scale to some of the largest reported provisions elsewhere in the market.

Santander UK had set aside £623 million by the end of June [3], while FirstRand, the owner of Aldermore and MotoNovo Finance, has reported a provision of around £750 million [4].

Lloyds Banking Group has made a considerably larger provision of £1.95 billion [5].

Other reported provisions include £430 million at Barclays [6], £424 million at Mercedes-Benz's UK motor finance operation [7], £320 million at Close Brothers [8] and £155 million at Ford's British motor finance business [9].

These figures should not be read as a ranking of how much lenders will ultimately pay. Different companies have their own portfolios, assumptions and accounting estimates, while the final operation of the FCA scheme remains subject to legal proceedings.

BMW has received almost 494,000 credit-related complaints

Separate BMW complaints data gives an indication of the scale of customer enquiries the lender has been handling.

BMW Financial Services (GB) reports that 493,953 credit-related complaints were opened during its latest reporting period.

The company says this was equivalent to 958.17 complaints for every 1,000 regulated credit agreements in place at 30 June 2026.

BMW specifically attributes the unusually high ratio to a significant increase in complaints connected with discretionary commission arrangements, or DCAs.

That does not mean BMW has almost 494,000 successful car finance claims.

Only 27,780 credit-related complaints were recorded as closed during the reporting period, and BMW reports that 8.42% of closed complaints were upheld.

The number of complaints received should therefore not be confused with the number of customers who will ultimately qualify for compensation under the FCA scheme.

What does the £611.6m provision mean for BMW Finance claims?

For customers, the size of BMW's provision does not determine whether an individual BMW finance claim will succeed.

The FCA's Motor Finance Compensation Scheme covers certain motor finance agreements entered into between 6 April 2007 and 1 November 2024.

The scheme addresses specified commission arrangements where the FCA considers customers may have been treated unfairly. These include discretionary commission arrangements, excessive commission and certain contractual ties between lenders and brokers.

PCP agreements can fall within the scheme where the relevant conditions are met.

That means some BMW PCP claims and other BMW motor finance complaints could potentially qualify, but simply having financed a BMW during the relevant period is not enough.

Similarly, having PCP car finance does not automatically mean a customer had mis-sold car finance.

Eligibility for a car finance claim depends on what happened with the individual agreement.

BMW is not challenging the FCA scheme

BMW's substantial provision is also worth distinguishing from the legal position taken by some other motor finance lenders.

BMW Financial Services says on its own motor finance redress page that it is not involved in the legal challenge to the FCA scheme.

The challenges have instead been brought by Volkswagen Financial Services UK, Mercedes-Benz Financial Services UK and CA Auto Finance UK, alongside Consumer Voice.

The Upper Tribunal has partially suspended parts of the compensation scheme [10] while those challenges are considered.

The hearing is currently expected to take place either from 14 to 18 December 2026 or 16 to 26 February 2027, depending on applications concerning expert evidence and disclosure.

In the meantime, lenders must continue preparing for the scheme and complying with provisions that have not been suspended.

BMW says it is continuing to prepare while the process is paused.

Are BMW car finance compensation payouts happening in 2026?

Customers searching for payouts 2026 should be careful with older information about the compensation timetable.

The FCA originally expected millions of claims to be settled during 2026. The subsequent legal challenges have disrupted that schedule.

Under the partial suspension, lenders do not currently have to calculate or pay compensation under the affected parts of the scheme while the Upper Tribunal process continues.

The FCA says that if its scheme is upheld and the judgment is not appealed, payments are expected to begin in 2027.

BMW similarly says it does not expect the outcome of the legal challenge to be known until early 2027.

This means BMW's £611.6 million provision should not be interpreted as money that is about to be distributed through BMW car finance compensation payments.

It represents the company's current estimate of its potential exposure.

Can BMW PCP customers make a claim?

Potentially.

Customers who had qualifying BMW motor finance agreements during the relevant period may be able to make a PCP claim or other motor finance complaint where the agreement meets the FCA's criteria.

That could include some PCP finance claims involving commission arrangements covered by the scheme.

However, a PCP compensation claim cannot be established simply from the make of the vehicle, the lender or the fact that the customer used PCP.

The circumstances of each agreement need to be considered.

Terms such as BMW PCP refund, car finance refund and PCP refund are often used when people search for information about historic finance, but compensation is not an automatic refund of everything a customer paid.

Likewise, a BMW PCP claim check or car finance refund check may help identify relevant historic agreements, but finding an agreement does not itself prove that compensation is owed.

What should BMW Finance customers do?

Customers who have already complained to BMW Financial Services do not currently need to submit the same complaint again.

BMW says customers who have already sent it a complaint do not need to do anything further at this stage while it prepares for the scheme.

Anyone who has not complained but is concerned about an historic agreement can complain directly to their lender for free.

The FCA also provides information and lender contact details for people considering car finance claims.

Consumers do not have to use a solicitor or claims management company, although they can choose professional representation if they prefer. Fees may apply where a representative is used.

Customers should also avoid submitting the same BMW car finance claim through multiple representatives, as this can complicate the process and potentially result in more than one fee arrangement.

What happens next for BMW car finance claims?

BMW's latest accounts provide a clearer picture of what the company currently believes the historic motor finance issue could cost it.

A £611.6 million provision is substantial, particularly when compared with the £207 million set aside a year earlier.

But it remains an estimate.

The eventual cost will depend partly on what happens to the FCA scheme in the Upper Tribunal and how the final rules apply to BMW's historic finance agreements.

That means the new accounts do not establish that BMW customers are collectively owed £611.6 million, nor do they guarantee that an individual BMW finance claim, PCP claim or other complaint will result in compensation.

What they do show is how significantly the potential cost of historic car finance mis-selling issues is now being reflected in the accounts of major motor finance providers.

For BMW customers with concerns about an old agreement, the underlying position remains straightforward: they can make a complaint directly to the lender for free, while eligibility for any eventual car finance compensation will depend on the agreement and the final application of the FCA scheme.

_________

References:

1. BMW's UK motor finance business has set aside £611.6 million for potential compensation under the Financial Conduct Authority's motor finance redress scheme - https://www.telegraph.co.uk/business/2026/09/22/bmw-facing-600m-hit-from-car-mis-selling-scandal/
2. BMW Financial Services (GB) increased the amount set aside for the FCA compensation scheme by more than £400 million during 2025 - https://cardealermagazine.co.uk/bmws-car-finance-compensation-bill-tops-600m-as-uk-lender-swings-to-139m-loss/327646
3. Santander UK had set aside £623 million by the end of June - https://www.lse.co.uk/rns/quarterly-management-statement-q2-2026-igig1dhemyq72qe.html
4. FirstRand, the owner of Aldermore and MotoNovo Finance, has reported a provision of around £750 million - https://trade.sharenet.co.za/v3/sens_display.php?scode=FSR&seq=53&tdate=20260407151900
5. Lloyds Banking Group has made a considerably larger provision of £1.95 billion - https://www.lse.co.uk/rns/LLOY/2025-q3-interim-management-statement-0ykud6yh7a81xa6.html
6. Other reported provisions include £430 million at Barclays - https://www.ajbell.co.uk/news/articles/barclays-announces-ps500-million-buyback-amid-solid-first-quarter
7. £424 million at Mercedes-Benz's UK motor finance operation - https://www.thetimes.com/business/companies-markets/article/mercedes-uk-loss-motor-finance-3gqjh6682
8. £320 million at Close Brothers - https://www.closebrothers.com/system/files/press/Update%20in%20relation%20to%20motor%20finance%20commissions_0.pdf
9. £155 million at Ford's British motor finance business - https://www.thetimes.com/business/companies-markets/article/ford-155m-car-finance-mis-selling-scandal-swg39bsmc
10. The Upper Tribunal has partially suspended parts of the compensation scheme - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended