Santander urges Reeves to intervene over £11bn car finance scheme

Core Viewpoint - Santander has expressed concerns that the £11 billion car finance compensation scheme could negatively impact the economy by limiting credit availability for consumers [1][4]. Group 1: Santander's Position - Santander has urged the UK Chancellor to intervene and narrow the scope of the compensation scheme to limit the number of drivers eligible for redress [2]. - The CEO of Santander, Mike Regnier, stated that the current scheme could disproportionately harm the UK car industry and called for material changes to be considered by the government [3]. - Regnier highlighted that without changes, the scheme could lead to unintended consequences affecting the car finance market, credit supply, and ultimately jobs and economic growth [4]. Group 2: Compensation Scheme Details - The Financial Conduct Authority (FCA) announced that approximately 14.2 million drivers could be eligible for compensation, with payouts estimated at £700 each [5][7]. - The FCA's redress scheme is expected to cover about 44% of all motor finance agreements made between 2007 and 2024 [8]. - Santander had previously allocated £295 million to cover costs related to the compensation but now argues that the FCA's package exceeds the Supreme Court's ruling on the matter [6]. Group 3: Industry Response - Other banks, including Lloyds Bank, are also challenging the FCA's plans, expressing concerns that the scheme is too broad and may consider legal action [9][10]. - The FCA is currently conducting a consultation process regarding the scope of the redress scheme, which is set to launch in early 2026 [11].