Santander hikes motor finance redress provision

Santander has become the latest lender to substantially increase its provision for potential compensation claims relating to motor finance misselling and commission payment, with the bank’s latest results showing the figure has ballooned to £478 million in total.

The lender had previously set aside £295 million to cover its redress costs, but in its annual results this week indicated it is now putting in an additional £183 million. Santander said it has already spent money on legal expenses and other costs which means the current provision now stands at £461 million.

The bank also noted that: “There continue to be significant uncertainties as to the nature, extent and timing of redress payments. The ultimate financial impact could be materially higher or lower.”

Despite the additional provision, Santander reported a 14% rise in annual pre-tax profit in the UK 2025, which hit £1.5 billion.

Santander’s move follows a similar increase in provision for compensation claims made by Barclays, which has set aside £325 million, and BMW Financial Services’ £210 million, while Lloyds has allocated almost £2 billion.

The Financial Conduct Authority (FCA) consultation on a motor finance redress scheme closed in mid-December.  The proposals have been strongly criticised by many lenders because they set a deadline of 2007 from which claims could be considered, posing considerable challenges in locating the necessary data and customers, as well as on grounds of a lack of proportionality.

The FCA has said it will release details of any final scheme ‘in February or March’.