LONDON, March 31, 2026, 13:11 BST
Barclays PLC faces renewed scrutiny after Britain’s Financial Conduct Authority fixed the final industry cost of a car-finance compensation scheme at about 9.1 billion pounds, lower than the 11 billion-pound figure in last year’s draft. The decision leaves Barclays, one of the lenders caught up in the scandal, facing a new test of whether money already set aside will prove enough. 1
Why this matters now is not just the size of the bill. Barclays has spent recent months promising higher returns, a stronger U.S. push and more than 15 billion pounds of shareholder distributions by 2028; a larger reserve for old car loans would jar with that message. 2
The FCA said 12.1 million agreements written between 2007 and 2024 are eligible for compensation, with average payouts of about 830 pounds. It said borrowers were denied the chance to seek a better deal and, in some cases, paid more because lenders and dealers did not clearly disclose commissions and other commercial ties. 3
Payouts are meant to start this year after a short implementation period. Loans written from April 2014 have a June 30 deadline for firms to get ready; older cases run to Aug. 31, after which lenders have three months to tell complainants whether they are owed money. 3
For Barclays, the immediate question is whether the 325 million-pound provision — an accounting reserve for expected costs — that it had built by October still looks enough. When the bank added 235 million pounds to that pot, it paired the charge with a 500 million-pound buyback, and Hargreaves Lansdown analyst Matt Britzman said Barclays was “quietly outperforming despite headline noise” once the provision was stripped out. 4
Barclays is not the biggest name in the line-up. Lloyds has set aside 1.95 billion pounds and Santander UK 461 million pounds, while Close Brothers said on Tuesday it was assessing the final scheme. When the consultation-stage plan was published in October, JP Morgan analysts said any further provisions for UK banks were “likely to be limited”, and Reuters reported RBC thought Barclays and Close Brothers were covered by existing reserves. 5
Still, motor finance is arriving on top of other credit questions. Reuters reported last week that Barclays was pulling back from some asset-based lending to smaller borrowers after exposure to the collapses of Market Financial Solutions and Tricolor left it facing possible losses. 6
Nikhil Rathi, the FCA’s chief executive, said the watchdog had listened to feedback and designed a scheme that is “fair for consumers and proportionate for firms”. The regulator split the compensation package into two time bands — April 2007 to March 2014, and April 2014 to November 2024 — to cut the risk of a drawn-out fight over older claims. 3
That does not settle it. Tom Dane, a financial services partner at CMS, called the changes “tinkering around the edges”, and Ashurst partner Nathan Willmott said challenges from lenders and borrowers were still possible. The final bill also depends on take-up: the FCA cut its assumption for the share of eligible consumers likely to claim to 75% from 85%. 1
Barclays reported 2025 pretax profit of 9.1 billion pounds in February and lifted its medium-term profitability targets. In October, CEO C.S. Venkatakrishnan said Barclays had been “robustly and consistently generating capital” for shareholders. That gives the bank earnings room, but fresh charges on legacy car loans would muddy a cleaner story management has been trying to tell about capital strength, cost cuts and shareholder returns. 2
