Santander UK has asked Chancellor Rachel Reeves to take control of what it describes as a developing motor-finance sector crisis and to intervene in the sector before the industry-wide compensation plan for mis-sold car-finance deals is finalised. The bank warns that without proper oversight, the fallout from the planned redress could ripple through the broader economy, putting credit availability, vehicle supply chains and jobs at risk.

Background and Context of the Call for Action

Santander’s appeal arises amid growing alarm across the finance industry that an extensive scheme to address the mis-selling of motor finance agreements could cost lenders around £11 billion [1]. The root of the problem lies in long-standing commission structures, including fixed commission agreements paid by lenders to dealers, which regulators and courts say may have resulted in consumers paying more than they should have for credit.

The bank argues that the proposed scale of pay-outs and the unknowns around execution make government engagement essential to avoid unintended consequences for the motor-finance market.

Summary of the Financial Conduct Authority Consultation and Proposed Redress Scheme

In early October 2025, the FCA launched a formal consultation on a proposed redress scheme [2] for what it deems a major case of mis-selling in the motor-finance sector.

Key details of the proposal include:

• The scheme would cover motor-finance agreements signed between 6 April 2007 and 1 November 2024. (The regulator noted that the timeframe addresses both older deals and those up to near-recent)
• The FCA estimates that affected customers would receive on average around £700 per agreement [3].
• Roughly £8.2 billion of the total cost (out of about £11 billion) is expected to go directly to consumer compensation [4], with the remainder covering scheme operational and administrative costs.
• The consultation asks for feedback from lenders, consumer groups and other stakeholders on how the scheme should operate, how consumers will be traced, and how to support customers whose contact details have changed.

The FCA stresses that while the process allows existing complaints to continue, the redress scheme is designed to streamline and scale compensation for large numbers of customers rather than rely solely on individual complaint journeys.

Considering the Services of a Claims Management Company

If you believe you may have been affected by this major case of mis-selling, you might consider contacting a specialist claims-handling business. A reputable claims management company can help you check whether you’re eligible for a payout, track down your old finance agreement and submit a claim for you.

As part of your research, look into whether they handle car finance mis-selling claims professionally and transparently, and whether they have clear terms (such as a “no win, no fee” basis). This will make them the best car finance claim company you can find.

By using a firm that specialises in PCP claims and broader finance-claims services, you may have a good idea how long does a PCP claim take, avoid the hassle of dealing directly with lenders, while ensuring your case is logged and ready when the scheme launches.

What Should You Do Now?

The FCA has now proposed an industry-wide compensation scheme for unfair car finance agreements between April 2007 and November 2024, with average payouts expected to be around £700 per agreement.

You can still choose to complain directly to your lender, go to the Financial Ombudsman Service, or wait for the FCA’s redress scheme, expected to begin in 2026, all of which are free to do.

Why take action now?

• If you’ve already complained, you’ll be among the first to be contacted once the FCA scheme begins.
• Lenders are only required to contact customers they can trace [5]. If you’ve moved or your old details have changed, it’s worth ensuring your complaint and contact info are up to date.
• Complaining now also means your case is already logged and ready for review when the scheme starts.
• If you haven’t complained yet, Reclaim247 can help trace your finance history and submit a complaint on your behalf using just your name, address, and date of birth. No paperwork. No hassle. No win, no fee.

Final Thoughts

The scale of this car finance refunds involving expected payouts of around £11 billion and millions of agreements means that even consumers who are not yet sure they were affected should at least check their position. Whether you engage directly with your lender or enlist a specialist finance claims expert, logging your case now places you in a stronger position when the scheme gets underway. Keep updated on the latest updates on car finance claims in the UK for a clearer picture on how long does car finance claims take to pay out. The window of opportunity will not remain open indefinitely, and prompt action can make a meaningful difference when it comes to realising your right to compensation in this unfolding chapter of the car finance scandal.

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References:

1. Santander’s appeal arises amid growing alarm across the finance industry that an extensive scheme to address the mis-selling of motor finance agreements could cost lenders around £11 billion - https://www.telegraph.co.uk/business/2025/10/29/santander-urges-reeves-intervene-11bn-car-finance-scheme/
2. In early October 2025, the FCA launched a formal consultation on a proposed redress scheme - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme
3. The FCA estimates that affected customers would receive on average around £700 per agreement - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
4. Roughly £8.2 billion of the total cost (out of about £11 billion) is expected to go directly to consumer compensation - https://www.fca.org.uk/publication/consultation/cp25-27.pdf
5. Lenders are only required to contact customers they can trace - https://www.kslaw.com/news-and-insights/motor-finance-litigation-moves-up-a-gear-with-fca-plan