Barclays boosts motor finance provision, challenges FCA redress plan

Barclays boosted its provision for a potential U.K. motor finance redress scheme to 325 million British Pounds, taking a 235 million British Pounds charge in the third quarter.

The bank said the increase from a previous 90 million British Pounds follows a consultation paper from the U.K.'s Financial Conduct Authority on its proposed compensation plan.

Barclays stated its view that the regulator's proposed scheme does not "accurately address actual loss (if any) suffered by customers and do not achieve a proportionate or appropriate outcome."

The company said it intends to make representations to the FCA to achieve a fair and just outcome.

Despite the charge, the bank raised its full-year guidance for return on tangible equity, a key measure of profitability, to greater than 11% from around 11%.

"We are therefore upgrading our 2025 RoTE guidance to greater than 11% and reaffirming our 2026 target of greater than 12%," Group Chief Executive C. S. Venkatakrishnan said, adding that this comes "despite an additional charge for motor finance redress."

The bank also announced a new 500 million British Pounds share buyback and plans to move to quarterly buyback announcements.

For the third quarter, Barclays reported a profit before tax of 2.1 billion British Pounds, down from 2.2 billion British Pounds a year earlier.

The company ceased new lending in the motor finance market in late 2019, according to the filing.