New year, but familiar EV and commission disclosure worries

A breathless start to the year has seen lenders support a strong new car market, while keeping a close eye on developments in the long-running commission disclosure case.

First the good news – the UK new car market recorded its strongest January performance since pre-pandemic 2020, with registrations rising 3.4% in January to 144,127 units.

This followed a bumper used car market in 2025, which marked a third consecutive year of growth, with transactions rising 2.2% to 7,807,872 vehicles, as improving new car supply fed through to the second-hand market.

Both new and used markets have seen battery electric vehicles establish themselves, although BEV’s share of the new car market slipped to 20.6% in January, well below the 33% required by the Government’s Zero Emission Vehicle Mandate.

Free home charging points would provide the biggest boost to used electric car sales, ahead of grants or low/zero interest loans, according to dealers surveyed in February’s Startline Used Car Tracker.

This tallies with conclusions from Rightcharge’s Annual State of Fleet Charging Report, which found that in 2025, fleets paid an average of 81p/kWh for public charging – more than three times the average 25p/kWh cost of home charging.

National demand for EVs masks significant regional variations, Autotrader’s latest Road to 2030 report finding lower interest in parts of Scotland and the South West, as well as an urban-rural gap, with 85% of city dwellers saying they would consider an EV compared with just 45% of those in rural areas.

The report also identified a ‘squeezed middle’ for 0-3 years old used EVs, with buyers pulled towards brand-new models, supported by grants, 0% finance and new sub-£30,000 launches, or towards better-value older used EVs. If residual values fall, finance costs will rise, warned Autotrader.

Electric van sales are also struggling in a light commercial vehicle market that recorded its weakest January in over a decade.

As bellwethers of the economy, falling van sales indicate subdued business confidence and constrained fleet investment. Moreover, the 10.4% market share captured by electric vans is woefully short of the 24% demanded by the ZEV Mandate this year.

Lending opportunities are naturally lower in a declining market, but there has been some good news for the auto finance industry, with signals that the Financial Conduct Authority (FCA) is back-pedalling on some of its proposals for a motor finance redress scheme. The Financial Times has reported that captive lenders may be exempted from some compensation claims, and that lenders will only have to contact customers entitled to compensation.

The FCA is also ramping up pressure on claims management companies (CMC) ahead of its industry-wide redress scheme for motor finance mis-selling claims, and has opened an enforcement investigation against one CMC.

Meanwhile, the Financial Ombudsman Service has reported that the overall number of complaints fell to its lowest level in two years in Q4 2025.

It attributed the drop to “clarity” from August’s Supreme Court judgement, and the £250 fee for cases brought by professional representatives (beyond the first 10 in a financial year).

Nonetheless, Santander has become the latest lender to substantially increase its provision for potential compensation claims, setting aside an additional £183 million to inflate its total provision to £478 million.