Barclays has announced it will offer early compensation to some motorists who were mis-sold car finance, allowing them to receive a payout before a major legal challenge is resolved.
The bank's finance arm, Barclays Partner Finance, said some customers with complaints acknowledged on or before October 1, 2026, will be offered an early settlement rather than having to wait for the wider redress process.
Martin Lewis says: "Barclays Partner Finance says it will settle some car finance mis-selling cases early, even before the legal challenge on the FCA’s scheme."
The move comes after the Financial Conduct Authority (FCA) found in 2024 that, since 2007, many motor finance lenders had not been properly telling customers important information about their agreements.
The regulator subsequently launched a compensation scheme estimated to provide £9 billion in redress to around 14 million people affected.
However, a legal challenge means the final outcome of the scheme remains uncertain, with a court hearing scheduled for February next year.
Barclays Partner Finance says it will settle some car finance mis-selling cases early, even before the legal challenge on the FCA’s scheme. This is my quick reaction, for far more help & technicals do an online search ‘MSE News Barclays Car Finance’ https://t.co/30TdTR2RTy
— Martin Lewis (@MartinSLewis) November 3, 2026
Who will get an early car finance compensation offer?
Barclays Partner Finance said customers whose complaints were acknowledged on or before October 1 this year will receive an early settlement offer.
The offers will be calculated using the FCA's redress scheme methodology, which the firm says will reflect the individual circumstances of each finance agreement.
Customers or their representatives will be contacted in the coming weeks and will be given the option to accept or reject the offer.
They will be told how their compensation has been calculated and given one month to decide whether to accept.
Barclays said the timing means payments can be processed before the legal challenge takes place in February.
What happens if you accept or reject the offer?
There is an important condition for customers considering an early payout.
Accepting the offer means agreeing to a full and final settlement, so customers will not be able to seek additional compensation in future.
However, Barclays said it will not ask customers to repay the settlement if the eventual outcome of the legal challenge means they would have been entitled to less compensation.
Those who reject the offer, or do not respond, will be given further information once the legal challenge has concluded.
They could then be entitled to a larger payment, a smaller payment or no compensation at all.
The legal challenge is due to be heard between February 16 and March 3, 2027, with a judgment expected in the following months.
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A Barclays Partner Finance spokesperson said: "We recognise that some customers have already faced a considerable wait for an outcome of their motor finance complaints.
"By making these early settlement offers, we are giving some customers the option of receiving redress sooner, rather than waiting for the legal challenges and any subsequent FCA action to conclude.
"Each offer will be calculated using the FCA’s own redress scheme methodology.
"We will clearly explain how it has been calculated and what accepting a full and final settlement means, so customers can decide whether accepting the offer is right for them."
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