Martin Lewis says Barclays, Santander, Lloyds customers could be owed £1,500 'each'

Barclays and Santander customers could be owed £1,500 if they signed up to car finance deals. The Financial Conduct Authority has reached out around a dozen banks about their auto lending practices, according to Martin Lewis' Money Saving Expert.

For decades, lenders including Barclays Plc, Lloyds Banking Group Plc and the UK arm of Spain’s Banco Santander SA have made big money from funding car purchases. Now, the FCA is looking at whether customers were told about the amounts of commission paid to the dealerships.

Mr Lewis, a consumer rights activist and the founder of MoneySavingExpert.com, wrote a post on X that motor finance had echoes of PPI, the payment protection insurance misselling scandal over a decade ago that cost the UK banking industry more than £38 billion ($48.4 billion) in compensation.

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Andrew Smith, chief executive officer of Paxen Group, a UK regulatory compliance advisory firm, said the ombudsman’s findings suggested there was a strong likelihood that lender, brokers and others involved in the sale of motor finance products could end up compensating borrowers.

“I’m not convinced it’s just the lending organization that will end up on the hook,” said Smith. Mr Lewis said: “The pay out would be either the interest on loans (which is big), the commission (which is big), or the whole loan (which is huge). We’re possibly talking thousands back for many.”

“The new rules will help us ensure our approach to providing any redress that is due to these customers leads to the right outcomes for consumers and the effective functioning of the motor finance market,” said the FCA in its statement.

Barclays said: “While we haven’t offered car financing since 2019, we are working with the Financial Ombudsman Service and Financial Conduct Authority to resolve historic complaints relating to these types of loans.” Santander UK said: “We welcome the clarity which the FCA’s intervention on this important issue will bring for both customers and motor finance firms alike.”