Major high street bank to pay thousands of customers £829 in compensation – Are you one of them?

Jack Walters
Sat, 25 Apr 2026 18:45:29 +0000

Santander has announced that it will not mount a legal challenge against the Financial Conduct Authority's car finance mis-selling compensation programme.

The high street bank is instead concentrating its efforts on delivering payments to affected customers.

"We have decided not to challenge the schemes and will now focus on their implementation," a Santander spokesman said.

The lender acknowledged the decision was carefully weighed, with the priority of providing certainty to customers, shareholders and the broader motor finance industry ultimately outweighing its objections to certain aspects of the proposed arrangements.

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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."

The compensation programme encompasses approximately 12.1 million car finance agreements that were mis-sold.

The FCA revealed in March that average payouts would reach £829 per claim.

Based on an estimated 75 per cent of those eligible coming forward, the regulator anticipates total redress of roughly £7.5billion.

The watchdog expects millions of claims to be settled during the current year, with the overwhelming majority resolved by the close of 2027.

Customers who have previously lodged complaints are likely to receive their money first, with lenders now permitted to begin distributing funds immediately, according to guidance issued by the FCA at the end of last month.

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The bank also pledged to engage constructively with regulators and policymakers going forward.

The majority of affected agreements involve discretionary commission arrangements, a practice outlawed in 2021 that allowed brokers and car dealerships to inflate interest rates on vehicle loans in exchange for larger commission payments.

According to the FCA, this system created unfair outcomes for motorists who were kept in the dark about these arrangements, denying them the chance to negotiate better terms or seek alternative financing.

Compensation eligibility extends to individuals who were not informed about high commission levels or contractual ties to particular firms.

The scheme applies to car finance contracts entered into between April 6, 2007, and November 1, 2024, covering nearly two decades of potentially problematic lending practices across the motor finance sector.

The FCA refined its redress programme following an extensive consultation that attracted more than 1,000 submissions from motor finance lenders, consumer advocacy organisations, vehicle manufacturers and trade bodies.

Initial proposals faced criticism from multiple directions, with finance providers arguing compensation levels were excessive and failed to reflect actual customer losses.

Meanwhile, consumer groups and certain parliamentarians contended the scheme would leave drivers undercompensated.

In response to this feedback, the regulator has narrowed the qualifying criteria to ensure only those genuinely treated unfairly will receive payments.

The FCA anticipates that approximately one-third of successful claims will be subject to caps, a measure designed to prevent excessive payouts to consumers.