Santander Puts Aside £295m To Deal With Motor Finance Crisis As FCA Considers New Dates
Santander has allocated £295 million to deal with the escalating motor finance crisis — a move that highlights just how serious the situation has become for lenders across the UK. The Financial Conduct Authority (FCA) is now considering extending complaint‑handling deadlines as the industry braces for potentially billions in compensation claims.
This provision forms part of Santander UK’s delayed third‑quarter results, which were pushed back following a major Court of Appeal ruling that has shaken the entire motor finance sector.
The Scale of the Motor Finance Crisis
The crisis centres around historic commission arrangements between lenders and car dealers — specifically, whether customers were mis‑sold finance deals without proper disclosure.
A recent Court of Appeal ruling against Close Brothers and MotoNovo owner FirstRand Bank has:
- Raised the legal bar for commission transparency
- Created uncertainty around how many agreements may be affected
- Forced lenders to prepare for large‑scale remediation
Santander’s £295m provision follows similar moves by:
- Lloyds Banking Group
- BMW Financial Services
Together, lenders have now set aside nearly £1 billion to handle potential claims.
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FCA Considers Extending Complaint Deadlines
The FCA is proposing new deadlines for firms to issue final responses to complaints involving non‑discretionary commission arrangements. The suggested dates are:
- 31 May 2025
- 4 December 2025
The regulator says the extension would:
- Give firms time to investigate cases properly
- Ensure consumers receive compensation in an orderly way
- Maintain stability in the motor finance market
FCA chief executive Nikhil Rathi has warned that the Court of Appeal ruling could mean a significant number of customers are owed redress.
Further updates are expected in May 2025, depending on whether the case progresses to the Supreme Court.
Could This Become “The Next PPI”?
Analysts are drawing comparisons to the infamous PPI mis‑selling scandal, which cost lenders over £38 billion.
Current estimates suggest:
- Compensation could exceed £30 billion
- The FCA has warned the total could reach £44 billion
- Some lenders may face financial instability if claims peak suddenly
This makes the motor finance crisis one of the most significant consumer finance issues in decades.
Final Thoughts
Santander’s decision to set aside £295 million shows just how seriously lenders are taking the motor finance crisis. With the FCA considering extended deadlines and courts raising the legal threshold for commission disclosure, the industry is preparing for a long and expensive period of remediation.
As comparisons to PPI grow louder, the coming months — especially the FCA’s May 2025 update — will be crucial in determining how compensation is handled and how lenders adapt.
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