BMW UK motor finance provision rises to £612m

BMW’s UK finance business has increased its provision for motor finance redress to almost £612 million, up from around £207 million a year earlier, according to accounts reported by The Times.

BMW Financial Services (GB) Limited had set aside £611.6 million at the end of 2025 to cover its expected exposure to the Financial Conduct Authority’s motor finance redress scheme, after increasing the provision by more than £400 million during the year.

According to The Times, the growing provision contributed to BMW’s British motor finance arm recording a £139.3 million pre-tax loss in 2025, compared with a £39.1 million profit in 2024.

The company used around £8 million of the provision during 2025 and has separately earmarked a further £25.5 million for agreements outside the scope of the FCA scheme where there remains a risk of future customer complaints and legal claims.

BMW has cautioned that the eventual cost could be “materially different” because of the continuing uncertainty surrounding motor finance redress.

The provision puts BMW among the UK motor finance lenders with the largest publicly reported exposures to the issue. Lloyds Banking Group has provisioned £1.95 billion, while FirstRand has set aside around £750 million and Santander UK’s provision stood at £623 million at the end of June. Barclays, Mercedes-Benz Financial Services, Close Brothers and Ford have also announced substantial provisions.

The FCA’s redress scheme relates to historic motor finance commission arrangements and is expected to cover more than 12 million agreements entered into between 2007 and 2024.

The regulator has estimated that around £7.5 billion could ultimately be paid in compensation, with lenders facing a further £1.6 billion in administrative costs.

Implementation of the scheme is currently subject to legal challenges from several motor finance lenders and a consumer group, adding uncertainty over the final liabilities facing firms across the sector.