Major high street bank to pay compensation to thousands of customers over mis-sold car loans

Published: 18:55, 25 April 2026 | Updated: 19:23, 25 April 2026 Santander has agreed to pay compensation following the widespread mis-selling of car finance loans.  Payouts are due on about 12.1 million mis-sold deals from an array of lenders at an average of £829 each, the financial watchdog said in March as it unveiled plans for its redress scheme. The Financial Conduct Authority (FCA) expects the total amount of redress paid under its scheme to be about £7.5billion, based on about 75 per cent of eligible consumers making a claim. It thinks millions of claims will be paid out this year and the vast majority settled by the end of 2027. A spokesperson for Santander said on Saturday: 'We have decided not to challenge the schemes and will now focus on their implementation.' Lenders can start making payments immediately and people who have already complained are likely to get paid first, the FCA said at the end of last month. Most of the car finance deals covered involve so-called discretionary commission arrangements (DCAs), which were banned in 2021. This refers to arrangements whereby brokers, including car dealers, were able to increase interest rates on car loans so they could get more commission. Payouts are due on about 12.1 million mis-sold deals from an array of lenders at an average of £829 each The FCA said this led to unfairness for customers who were not properly informed about the arrangement and therefore did not have the opportunity to negotiate or find themselves a better deal. People who were not told about a deal involving high commission or a contractual tie to a firm are also eligible for compensation. The programme covers agreements taken out between April 6, 2007 and November 1, 2024. On reaching its payout decision, Santander added: 'This was a finely balanced judgment reflecting our primary desire to bring greater certainty to our customers, shareholders and the wider motor finance sector, factors which outweighed our disagreement with elements of the proposed schemes. 'We will continue to work constructively with regulators and policymakers to seek to improve the competitiveness of the UK in the interests of all our customers, taxpayers and investors.' The FCA made changes to the long-awaited redress scheme's format after receiving more than 1,000 responses to a consultation, including from motor finance lenders, consumer groups, carmakers and industry bodies. The initial proposals drew criticism from both sides, with lenders and car finance providers raising concerns that the level of redress was too high and did not accurately reflect what customers lost, while consumer groups and some MPs argued that motorists would be short-changed under the plans. The feedback has resulted in it tightening the eligibility criteria so only those who were treated unfairly will get compensation, according to the FCA. It expects around a third of cases to be capped to ensure consumers will not be paid too much. The comments below have not been moderated. The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline. By posting your comment you agree to our house rules. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook. You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy.