Some car finance customers are starting to receive letters offering a payment now, rather than waiting for the legal challenges to the FCA's compensation scheme to finish. An offer might suit one person and not another, and the letter will use terms such as 'full and final settlement' that carry real consequences.
On 3 November 2026, the FCA published its minimum expectations for lenders that choose to make these offers. This guide explains what the FCA has said, what accepting an offer means in practice and which questions are worth asking before you reply. We do not recommend accepting or declining any offer. The decision is yours and depends on your own agreement and circumstances.
IN THIS ARTICLE
- Why lenders are making settlement offers now
- What 'full and final settlement' means in practice
- What the FCA expects an offer letter to include
- Questions to ask before you reply
- Accepting or waiting: two routes with different trade-offs
- How to check a settlement offer is genuine
- Frequently asked questions
Why lenders are making settlement offers now
The FCA confirmed its motor finance redress scheme on 30 March 2026. It covers regulated agreements made between 6 April 2007 and 1 November 2024. Since 2 July 2026, parts of the scheme have been partially suspended while the Upper Tribunal considers legal challenges from four parties. The Tribunal is due to hear those challenges between 16 February and 3 March 2027.
During the suspension, lenders must keep preparing for the scheme and keep progressing complaints as far as they can. They do not have to calculate or pay compensation under the scheme until the legal process concludes. Some lenders may choose to offer a payment earlier, and the FCA supports that, provided each offer is no less than the customer would receive through the scheme.
Not every lender will make offers, and those that do may only offer them to some customers. Barclays Partner Finance has confirmed that it will make offers to some of its customers.
Cited evidence
The FCA says a lender making an offer must be able to show the amount is at least equal to the maximum redress available to that customer under the scheme methodology, including relevant adjustments and caps.
Source: FCA, Motor finance scheme: settlement offers, 3 November 2026.
What 'full and final settlement' means in practice
A full and final settlement ends your claim for everything that falls within the scope of the current scheme. According to the FCA, accepting means you give up any entitlement to compensation under that scheme, and your existing complaint will ordinarily be treated as withdrawn.
You keep the payment, but cannot claim more later
The FCA says you would keep the money even if the legal challenge ends with a lower amount. You also could not claim more later if the outcome would have paid more. The challenge could lead to an amended scheme, or to no mandatory scheme at all, and either result could mean more or less redress. Neither the lender nor the customer can claim the difference afterwards.
Mixed complaints
Some complaints have a scheme element and a non-scheme element, such as GAP insurance or affordability. An offer under these arrangements only aims to settle the scheme element. The lender should have responded to the other points separately, or should do so within one month of you accepting.
The Financial Ombudsman Service
If you decline an offer, you can wait for the outcome of the legal challenge. At this stage, you cannot refer the offer or the underlying complaint to the Financial Ombudsman Service.
What the FCA expects an offer letter to include
The FCA has set minimum expectations for the letters that come with these offers. They are a useful checklist when you read yours. A letter should:
- give you at least one month to respond
- explain the background, including the scheme and its partial suspension
- confirm that the amount is at least equal to the maximum redress available under the scheme
- explain that you can accept now or wait for the outcome of the legal challenge
- explain what a full and final settlement means in practice
- point you to the FCA's frequently asked questions factsheet
- set out, in an appendix, the type of commission arrangement identified, the basis of liability, and how the amount was calculated, including any set-off, caps, compensatory interest and income tax deduction
- make clear that the FCA has not reviewed or approved the individual offer
The last point matters. The FCA does not check individual offers, so the responsibility for understanding the letter sits with you. The FCA encourages anyone who does not understand an offer to ask the lender for clarification or to seek advice.
Questions to ask before you reply
These questions can help you read an offer carefully. They are not a substitute for advice on your own circumstances.
- Does the letter show how the amount was worked out, including interest, any caps and any tax deducted?
- Does the offer relate to one agreement or several? Check it against the agreement dates and lender names on your paperwork.
- Is any part of your complaint about something the offer does not cover?
- What is the deadline for replying, and is it at least one month?
- Do you understand what you would be giving up by accepting? If not, ask the lender to explain in writing.
If you cannot find your paperwork, our guide to finding your car finance agreement details explains where to look.
Accepting or waiting: two routes with different trade-offs
Neither route is right for everyone. The FCA says there is no obligation to accept an offer, and anyone who wants to wait for the legal challenges to conclude can do so.
Accept the offer
- Timing: Payment may arrive sooner.
- Amount: Fixed at the amount offered.
- Your complaint: Ordinarily treated as withdrawn.
- Ombudsman: The settlement is final.
Wait for the legal outcome
- Timing: Depends on the Tribunal outcome and what follows. No payment under the scheme is guaranteed, and timings may change.
- Amount: Could be higher or lower, depending on the outcome.
- Your complaint: Remains open.
- Ombudsman: You cannot refer the offer or complaint at this stage.
Our guide on whether to wait or complain now covers the wider timing picture, and the motor finance redress scheme hub tracks the latest position.
How to check a settlement offer is genuine
The FCA says it will regularly update its website with the lenders making settlement offers, so you can check whether an offer is genuine. Lenders making offers must also share the FCA's factsheet with you.
If a message about an offer reaches you unexpectedly, contact the lender using details you already hold, such as those on your agreement or the lender's own website, rather than links or numbers in the message. Never share bank details unless you have confirmed the request is genuine.
Important information
This article is for general information only and is not legal or financial advice. The position is subject to ongoing legal proceedings and may change. No outcome or payment is guaranteed. If you are unsure about an offer, ask your lender to explain it in writing or seek independent advice before you reply. The information was accurate at the time of publication.
