2 days ago
BMW Sets Aside £612m for UK Motor Finance Scandal
BMW has put aside £612 million to help pay people involved in a car-finance scandal.
The issue concerns payments made to car dealers for arranging loans.
Some customers were not properly told about these commission arrangements.
The UK financial regulator created a plan to compensate eligible customers.
The plan covers about 12.1 million older car-finance agreements.
The average payment could be around £830.
Other lenders have also set aside large sums of money.
Courts may change the plan, so payments could be delayed or different from current estimates.
BMW Financial Services UK increased its provision for motor finance claims from £206 million in 2024 to £612 million in 2025.
The Financial Conduct Authority compensation scheme covers about 12.1 million historic motor finance agreements.
Eligible motorists could receive an average payout of about £830, while lenders are expected to pay roughly £7.5 billion in compensation.
BMW reported a £139 million pre-tax loss in 2025, compared with a £39 million profit in 2024.
Legal challenges could alter the scheme’s scope, total cost and payment timing, with compensation potentially delayed until 2027.
- Who
- BMW Financial Services UK, the Financial Conduct Authority, affected motorists and other motor lenders are involved.
- What
- BMW increased its provision for claims linked to alleged motor finance mis-selling to £612 million.
- Where
- The matter concerns historic motor finance agreements in the United Kingdom.
- When
- The provision was increased in BMW Financial Services UK’s 2025 accounts; compensation could be delayed until 2027, with a legal hearing expected in December or February 2027.
- Why
- The Financial Conduct Authority found that some dealer commission arrangements were not properly disclosed to customers, raising concerns about whether motorists received fair deals.
Scheme Supporters and Consumer Advocates
Scheme Challengers and Affected Lenders
Compensation framework
Scheme Supporters and Consumer Advocates
The Financial Conduct Authority’s proposed scheme is intended to compensate eligible motorists affected by undisclosed or improperly handled dealer commissions.
Scheme Challengers and Affected Lenders
Consumer Voice, supported by Courmacs Legal, argues that the proposed compensation does not go far enough for affected motorists.
Legal status and scope
Scheme Supporters and Consumer Advocates
The FCA estimates the scheme could provide compensation across about 12.1 million historic agreements.
Scheme Challengers and Affected Lenders
The motor finance arms of Mercedes-Benz and Volkswagen, along with Crédit Agricole, are legally challenging the scheme and could affect its scope.
Timing and final cost
Scheme Supporters and Consumer Advocates
The scheme provides a framework for compensation and administration payments, with lenders making provisions based on its published terms.
Scheme Challengers and Affected Lenders
Lenders warn that court challenges could materially change the final cost and delay payments; FCA officials have said the scheme could be struck down in whole or part.
Key facts
- BMW provision
- £612 million in 2025, up from £206 million in 2024
- Agreements covered
- Around 12.1 million historic motor finance agreements
- Estimated average payout
- About £830 for eligible motorists
- Estimated compensation
- Around £7.5 billion
- Estimated administration costs
- A further £1.5 billion
- Additional BMW provision
- £25.5 million for agreements outside the proposed scheme that could still lead to legal claims
- BMW 2025 pre-tax result
- A £139 million loss, compared with a £39 million profit in 2024
Sources
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