Barclays boosts motor finance redress provision to 325 million pounds

Barclays said on Wednesday it has increased its provision for a potential redress scheme for motor finance customers to 325 million British Pounds, up from a previous 90 million British Pounds.

The move follows a consultation paper from the UK's Financial Conduct Authority on a proposed compensation plan related to historical discretionary commission arrangements.

The bank will recognize an additional charge of 235 million British Pounds in its third-quarter results, which it estimates will reduce its Common Equity Tier 1 ratio, a key measure of financial health, by approximately 5 basis points.

Barclays, which exited the motor finance market in late 2019, said the increase reflects the likelihood of more cases and higher redress payments under the regulator's proposed methodology.

The company stated its opposition to the proposal, saying, "We are however, of the view that the scope of the scheme and proposed approach to redress outlined in the consultation paper do not accurately address actual loss (if any) suffered by customers and do not achieve a proportionate or appropriate outcome."

Barclays said it intends to make representations to the regulator about its concerns.

The final terms of the compensation scheme are expected in early 2026, and the ultimate financial impact remains uncertain, according to the company.