Drivers caught up in the car finance mis-selling saga have waited a long time for clarity, and Barclays now says it will make early compensation offers before the legal dispute is resolved. That is a welcome development for anyone who would rather have money sooner than wait for a court outcome that is not expected until next year. But early settlement is only fair if the terms are fair, and the report gives reason to look hard at what is actually on offer.
The Financial Conduct Authority has said it would welcome such offers as long as customers are not given a worse deal than under its proposed central scheme. That condition matters. The scheme itself is facing a legal challenge, with a hearing scheduled from 16 February to 3 March, and compensation under it is unlikely to be paid until late next year. A driver who accepts a settlement now is giving up any further claim, and cannot ask for more later if the court outcome would have paid them more. The report says lenders must be clear about this, and that is the minimum standard. A driver facing a choice between money now and an uncertain sum later should not have to decode legal language to understand what they are signing away.
The regulator says only a minority of claimants are expected to receive early offers, so most drivers will still wait. Stephen Braviner Roman's assurance that anyone who prefers to wait can do so, and that there is no obligation to accept, is sensible. The FCA also says it will monitor firms making offers, which is necessary given that the report notes an average expected payout of about £829 across roughly 12 million loans.
My view is that the regulator should publish and enforce a clear comparison standard so drivers can see, in plain numbers, how an early offer compares with the likely central-scheme payout for their own loan. The factsheet and list of lenders making offers are helpful, but they will only protect people if drivers can use them quickly. Anyone concerned about a car finance deal who has not yet complained should also do so directly with their lender, free of charge, rather than assume an offer is coming.