Bank warns of economic risks from FCA’s redress proposals as industry awaits clarity
Santander UK has called on the government to reconsider the Financial Conduct Authority’s (FCA) proposed car finance compensation scheme, warning that the current approach could have far-reaching consequences for the economy, employment, and consumers.
The FCA’s scheme, designed to address mis-sold car loans, could see up to 14.2 million individuals receive an average of £700 each. The regulator found that lenders failed to disclose commission payments to brokers, resulting in customers potentially missing out on better deals and, in some cases, paying more for their finance agreements.
Santander UK, which is owned by Spain’s Banco Santander, stated that the FCA’s proposals differ significantly from the Supreme Court decision that led to the redress plan. The bank’s chief executive, Mike Regnier, has urged ministers to consider substantial changes to the scheme.
“We believe that the level of concern in the industry and market is such that material changes to the proposed FCA redress scheme should be an active consideration for the UK government,” Regnier said.
“Without such change, the unintended consequences for the car finance market, the supply of credit and the resulting negative impact on the automotive industry and its supply chain could significantly impact jobs, growth and the broader UK economy. This could also cause significant detriment to the consumer. What is at stake is the supply of credit that customers need and that supports a very important sector for the economy.”
Santander UK decided not to publish its scheduled third-quarter results as it waits for clarity on a compensation plan proposed by the Financial Conduct Authority https://t.co/Kr8s3TiN0p
— Bloomberg (@business) October 29, 2025
Santander UK postponed the release of its latest financial results, citing ongoing uncertainty over the scheme’s potential impact on the bank and the wider market. No new date for the results has been set. The lender had delayed its third-quarter results last year for similar reasons.
Despite the uncertainty, Santander UK said it does not expect the scheme to have a material adverse effect on its financial position, even in a worst-case scenario. The bank has already set aside £295 million to cover possible compensation costs.
The FCA maintains that its compensation scheme is the most effective way to resolve outstanding liabilities for both lenders and consumers. “We believe a compensation scheme is the best way to settle, for both lenders and consumers, liabilities that exist no matter what,” said a spokesperson for the regulator. “Alternatives would cost more and take longer. It’s vital we draw a line under the issue so a trusted motor finance market can continue to serve millions of families every year.”
Earlier this year, Chancellor Rachel Reeves requested permission for the Treasury to intervene in the Supreme Court appeal, citing concerns that the outcome could cause economic disruption in the car loan sector.
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