Reported by The Guardian
Bank to make ‘early settlement’ offers before outcome of legal battle, with those who accept likely to get money before Christmas
Barclays will this month start offering compensation to tens of thousands of people who claim they were mis-sold car loans, with some of those who accept likely to see the money land in their account before Christmas.
Amid an ongoing legal battle over an industry-wide compensation scheme for victims of the UK’s car finance scandal, Barclays has become the first big UK lender to break cover and begin offering payouts to some customers who have complained.
More from the original report
Under the rules, “early settlement” offers of this kind must at least match what people would receive under the multibillion-pound scheme that is being challenged – which may help to address fears that banks might try to make “lowball” offers.
But consumers face a tricky decision as, depending on the outcome of the legal battle, they could end up with more money, less money or nothing at all if they decide to decline the offer and wait.
In March this year, the Financial Conduct Authority (FCA) announced a £9.1bn compensation scheme for the millions of victims of the scandal.
But legal challenges forced the regulator to partly suspend the scheme , and a hearing to decide what happens is due to go ahead in February next year.
The FCA had expected to start paying out £829 on average this year to those affected by the scandal, in which drivers were overcharged for loans as a result of commission payments between lenders and car dealers between 2007 and 2024.
Millions of people were treated unfairly when they took out motor finance to buy a new or secondhand car, motorbike or van, and ended up paying more than they should have done.
Until the legal challenge is concluded, lenders do not need to pay compensation to people owed money under the scheme.
However, Barclays Partner Finance – part of the banking group – has decided to offer payments now to some of those who would be due compensation under the scheme.
That has prompted speculation…