Santander UK has reported a 6% fall in profits for the first nine months of 2026 [1], with the cost of preparing for car finance compensation among the reasons behind the decline.

The bank's latest financial results, published on 28 October, show that it made £1.158 billion in pre-tax profit between January and September [2]. That compares with £1.229 billion during the same period last year.

Santander attributed the drop partly to money set aside for historic motor finance commission complaints, alongside higher restructuring costs.

The bank has confirmed that £616 million remains reserved for potential motor finance compensation and related costs as of 30 September 2026.

What makes Santander's position particularly interesting is that it has chosen not to challenge the Financial Conduct Authority's (FCA) compensation scheme.

Instead, it has been preparing to put the scheme into practice, even as other lenders pursue legal challenges that have delayed payments across the industry.

Why has Santander set aside £616 million for car finance compensation?

The money relates to potential costs arising from historic motor finance commission arrangements.

For years, some dealerships received commission from lenders when they arranged vehicle finance for customers. Concerns emerged about how certain arrangements worked and whether motorists were given enough information before agreeing to finance.

The issue eventually led to the FCA introducing its Motor Finance Redress Scheme in March 2026 [3].

After examining the final rules, Santander reviewed how much it might need to cover potential compensation, administration and legal costs.

This resulted in a total provision of £633 million at the end of March 2026.

Santander's latest results show that £616 million of that provision remained at the end of September, after some costs had already been incurred.

The distinction matters.

The £616 million is not an amount Santander has already paid to customers. It is money accounted for against potential liabilities and costs associated with the compensation scheme.

The bank also recorded an additional £179 million provision charge in the first quarter of 2026, which contributed to the fall in its year-to-date profits.

Santander has said it will continue reviewing the provision as the legal and regulatory position develops.

Why did Santander decide not to challenge the FCA scheme?

Unlike some other motor finance providers, Santander decided to work towards implementing the FCA's final compensation rules rather than bring its own legal challenge.

The bank confirmed this position in its financial results, explaining that it had reviewed the final scheme and adjusted its preparations accordingly.

That does not mean Santander has agreed to pay compensation on every historic finance agreement.

It means the bank has chosen to prepare for the regulatory framework instead of contesting it before the Upper Tribunal.

Three other lenders have taken a different approach.

Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance are challenging aspects of the FCA's scheme [4]. Consumer Voice has also brought a separate challenge, raising concerns from a different perspective.

The lenders' objections include questions about how the FCA assessed consumer harm and calculated compensation.

Consumer Voice has questioned whether the scheme offers sufficient redress to affected motorists.

The Tribunal has not yet ruled on these challenges.

For Santander, the proceedings still matter because their outcome could change the framework it has been preparing to follow.

What do Santander's latest financial results show?

Santander's mis-sold car finance provision was not the only reason its profits fell.

The bank reported £1.158 billion in pre-tax profit for the nine months to 30 September 2026, £71 million less than the same period last year. Higher restructuring costs also weighed on its results.

However, there were some positive figures. Santander's acquisition of TSB helped offset part of the decline, with TSB contributing £96 million in pre-tax profit between May and September. The bank also reported a 17% rise in net interest income.

So, while the car finance scandal has added to Santander's costs, it was not the sole reason for the drop in Santander profits 2026.

However, the historic commission issue remains a significant financial consideration.

Santander has acknowledged that its eventual costs could differ from current estimates, depending on factors including how many eligible consumers participate and the average amount of compensation paid.

Its latest results therefore show the financial preparations already being made, rather than the final cost of resolving historic motor finance complaints.

Does Santander's provision mean compensation payments are getting closer?

Not necessarily.

Although Santander has prepared financially for the scheme, compensation payments under the suspended provisions remain on hold.

The FCA's Motor Finance Consumer Redress Scheme has been partially suspended since July 2026 [5], following challenges brought before the Upper Tribunal.

The suspension allows lenders to continue preparing without completing certain work that could need to be repeated if the legal challenges succeed.

Under the current arrangements, lenders are not required to calculate or pay compensation under the suspended rules.

Santander's decision to maintain a substantial provision does not override those restrictions or establish when customers will receive money.

The bank has also acknowledged that the legal proceedings leave uncertainty over the eventual cost and timing of compensation.

For motorists waiting for a possible Santander car finance refund, the latest financial results are evidence of Santander's preparations, not confirmation that payments are about to begin.

When will the FCA car finance compensation hearing take place?

The Upper Tribunal hearing is now scheduled for 16 February to 3 March 2027 [6].

The FCA confirmed the revised dates on 26 October 2026, following another case management hearing earlier that month.

The hearing had previously been expected to finish on 26 February, but the Tribunal allowed additional time to consider the legal arguments and economic evidence.

A judgment is expected in the months after the hearing.

However, 3 March 2027 is when the hearing is expected to finish, not when motorists will receive their compensation.

If the Tribunal rules in favour of the FCA's scheme, lenders could move ahead with preparations for payments, although further steps may still be needed.

If the Tribunal decides that parts of the scheme need to change, motorists could face an even longer wait.

This means customers hoping for car finance payouts 2026 should not assume that Santander's financial preparations will result in payments this year.

The FCA has not confirmed when individual motorists will receive compensation.

What does this mean for Santander car finance customers?

Motorists who previously arranged vehicle finance through Santander Consumer Finance may be wondering whether the bank's latest announcement affects their own agreements.

The short answer is that the financial results do not change the eligibility requirements or guarantee a refund.

Santander's provision relates to the potential cost of dealing with historic commission arrangements across relevant agreements.

Whether an individual customer qualifies will depend on the terms of their finance and the commission practices involved.

The FCA scheme covers potentially eligible agreements entered into between 6 April 2007 and 1 November 2024.

That includes certain Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements.

However, having a Santander finance agreement within those dates does not automatically mean compensation is due.

Some agreements may have involved arrangements that fall within the scheme, while others may not.

The amount of any payment would also depend on the applicable compensation calculation.

Customers can find more information in our Santander car finance claims guide.

How much compensation could Santander customers receive?

There is no confirmed average compensation figure specifically for Santander customers under the FCA scheme.

Across the wider motor finance market, the regulator estimates average compensation of approximately £829 per eligible agreement [7].

The FCA also estimates that around 12.1 million agreements could qualify, with total consumer payouts potentially reaching £7.5 billion if 75% of eligible consumers participate.

These figures are industry-wide estimates, not promises of payment.

A customer's compensation will depend on their individual agreement, including the commission arrangements and any financial harm identified under the relevant rules.

Some motorists may receive more than the estimated average. Others could receive less or find that their agreement does not qualify.

Santander's £616 million provision should not be divided by the FCA's estimated average to calculate how many customers might receive compensation.

The provision also includes associated costs, and the bank has not provided enough information to make a reliable calculation of individual customer outcomes.

Can Santander customers still make car finance claims?

Yes. The ongoing legal proceedings do not prevent motorists from submitting complaints about potentially unfair historic commission arrangements.

Anyone concerned about possible car finance mis-selling can still contact their lender directly for free.

For customers who no longer have their original finance paperwork, bank statements, credit reports or previous correspondence may help identify the agreement.

A car finance refund check may also help motorists investigate whether they have a historic agreement worth reviewing.

Consumers can manage their own complaints or choose assistance from an FCA regulated claims management company or solicitor.

Professional representation may involve fees, so it is important to check the terms before appointing someone.

Anyone who has already submitted a complaint generally does not need to start another one because of Santander's latest financial results.

What happens next for Santander and the wider car finance scandal?

Santander have made their provision but its unclear how much they may have to pay out.

They said that they will continue to assess their provision as more becomes known through the course of the litigation.

The next big hurdle for the industry is the Upper Tribunal hearing which will take place in February and March 2027.

The Upper Tribunal will be reviewing the challenge on how the FCA calculated its method of compensation to the consumers.

For Santander customers, the outcome could influence the rules used to assess eligible agreements and determine compensation.

Until the legal position is resolved, motorists can continue checking their historic finance agreements and exploring their complaint options.

Santander's latest results show that the FCA car finance compensation scheme is already having a financial impact on lenders, even though payments to affected consumers under the suspended rules have yet to begin.

Frequently asked questions

Has Santander paid £616 million in car finance compensation?

No. The £616 million is the provision remaining on Santander's accounts at 30 September 2026 for potential compensation and associated costs. It should not be confused with money already paid to customers.

Is Santander challenging the FCA compensation scheme?

No. Santander confirmed that it decided not to challenge the final scheme and instead focused on preparing for implementation. Other lenders and Consumer Voice are involved in the Upper Tribunal proceedings.

Can I claim compensation for an old Santander PCP agreement?

Potentially. The FCA scheme covers certain historic motor finance agreements entered into between 6 April 2007 and 1 November 2024. Eligibility depends on the commission arrangements and other relevant conditions, not simply whether the agreement was PCP.

How long until Santander car finance compensation is paid?

No known date at this time. The Upper Tribunal will be held between the 16th February and 3rd March 2027. It's expected that we will get a judgement within the next few months. Once that happens it will then be a matter of how long payments take to be released.

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References:

1. Santander UK has reported a 6% fall in profits for the first nine months of 2026 - https://cardealermagazine.co.uk/santander-profits-slide-6-as-car-finance-compensation-scandal-begins-to-take-toll/328534
2. The bank's latest financial results, published on 28 October, show that it made £1.158 billion in pre-tax profit between January and September - https://www.investegate.co.uk/index.php/announcement/rns/santander-uk-plc--sanb/3rd-quarter-results/9845385
3. the FCA introducing its Motor Finance Redress Scheme in March 2026 - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
4. Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance are challenging aspects of the FCA's scheme - https://consumervoice.uk/cars/fca-car-finance-compensation-challenge/
5. The FCA's Motor Finance Consumer Redress Scheme has been partially suspended since July 2026 - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended
6. The Upper Tribunal hearing is now scheduled for 16 February to 3 March 2027 - https://www.fca.org.uk/news/statements/motor-finance-legal-challenge-be-heard-february-2027 
7. the regulator estimates average compensation of approximately £829 per eligible agreement - https://www.fca.org.uk/publication/policy/ps26-3.pdf