The £9bn car-finance scandal is already showing up in lenders' accounts

Between 2007 and 2024, UK car-finance lenders paid dealers commissions that were hidden from, or not properly disclosed to, the customer, often inflating the interest rate the customer paid. The Supreme Court ruled on the practice in August 2025. The FCA confirmed an industry-wide redress scheme in March 2026: roughly £7.5bn of compensation, £9.1bn of total cost to firms, 12.1 million eligible agreements.

Those are the numbers everyone reports. But the FCA’s totals are abstractions. The bill itself is landing somewhere concrete: in the statutory accounts each lender files at Companies House. We read them.

Across the 17 exposed lenders, combined profit before tax swung from +£156M to −£1.09bn in the latest filed year, a swing of −£1.25bn, with 13 of the 17 loss-making. The filings show who is taking the hit, how hard, and what it is doing to the market: one major lender is quitting UK consumer finance.

How we got here

The scheme is opt-in (the FCA assumes ~75% take-up), covers discretionary commission arrangements, “high commission” cases and exclusive contractual ties, and the average payout is £829. The ~90,000 consumers getting full commission back are the exception, not the rule.

The damage, lender by lender

What follows is from the latest two filed periods per lender, taken from public Companies House accounts and verified line-by-line against the filed PDFs. Several of the provision figures below appear nowhere in a press release; they sit in the notes to accounts that almost nobody reads. Entity accounts and group results differ; each row says which it is.

The epicentre: the banks’ motor-finance arms

Black Horse, the UK’s biggest car-finance provider, has now filed two consecutive heavy loss years, a cumulative −£930M. Close Brothers is the cleanest before-and-after in the dataset: a +£178M profit became a −£68M loss, with the accounts itemising a £165M commission provision, £33M of early-settlement remediation and £18.7M of complaints-handling costs inside a £198M admin-expense jump. It won its case at the Supreme Court and still swung to a loss. MotoNovo’s own accounts book a £58.5M commission provision, a fraction of FirstRand’s £750M group figure, for reasons we come to below. Barclays’ Clydesdale stopped writing motor finance in 2019, but the 2010–2019 book is in scope: an £88.4M “litigation and conduct” charge deepened its losses while total assets shrank from £2.6bn to £1.7bn. The book is being run down.

The manufacturer captives

Only two of those seven provision figures, BMW’s and Mercedes’, appear to have made the press. Honda’s £62.2M, CA Auto’s £131.5M, RCI’s £73.6M and Hyundai’s £34.5M sit in the notes to accounts filed at Companies House; we could find no press report of any of them. And Volkswagen FS is the outlier in the other direction: while every peer provisioned, it recognised nothing, stating that no obligation can be reliably estimated, and joined the legal challenge instead.

A caution that still matters: captive-lender results in 2024 can also carry credit impairments and electric-vehicle residual-value writedowns, so the provision is not necessarily the whole of any one swing. Mercedes’ loss in particular likely includes residual-value pain alongside the confirmed £395M.

The thin end: specialist and subprime lenders

The control group

Same market, same years, same macro — profits up, dividends maintained (Toyota paid £78.6M, FCE Bank £500M). Car finance did not suddenly become a bad business; the visible differentiator is the size of each lender’s historic commission exposure and when it chose to book it. (These lenders are still in scope of the scheme like everyone else; their filed years simply absorbed it.)

Six things only the filings show

1. Black Horse traded with negative equity. At end-2024 its equity was −£239M. In October 2025 Lloyds quietly recapitalised it with a £783M share issue (it’s in the statement of changes in equity), restoring the balance sheet to +£229M. A solvent group, but the subsidiary’s accounts show the scandal physically blew through its capital.

2. Close Brothers’ scandal costs are itemised in its cost line. Admin expenses rose £448M → £646M, and the accounts name the parts: a £165M commission provision, £33M of early-settlement remediation and £18.7M of complaints-handling costs.

3. MotoNovo’s entity accounts hide the iceberg. The Companies House entity (incorporated 2018) shows a −£24.6M loss and a £58.5M commission provision; the historic 2007–2019 book (the bulk of FirstRand’s £750M group provision) sits on a London branch of a South African bank that files no UK statutory accounts. Entity-level data needs group context.

4. Dividends are the early-warning light. Santander Consumer (£70M → 0), BMW FS (£150M → 0), Hyundai Capital (£100M → 0) and Startline (£10.9M → 0) all stopped paying their parents the year they provisioned. Toyota and Ford kept paying.

5. Barclays is running its book down. Clydesdale’s total assets fell £2.6bn → £1.7bn while losses deepened: exit by attrition, a decade after it stopped writing new motor loans.

6. The losses reach the bottom of the market. Billing Finance, with £21M of turnover and about 110 staff in Northampton, swung to a loss in the same filing season as Lloyds. The same window, four orders of magnitude apart.

What happens next

• Exit. FirstRand is selling Aldermore and MotoNovo and leaving UK consumer finance: the first whole-market casualty, explicitly blamed on a scheme it calls “deeply flawed, disproportionate and unfair”. Someone has to buy a £4.4bn loan book mid-scheme.
• Litigation. Four challenges to the scheme are live: Mercedes-Benz FS, Volkswagen FS, CA Auto Finance, and Consumer Voice, the last arguing it under-compensates. A successful challenge moves every number above, and the timetable is already slipping: the FCA says payouts it expected to start in 2026 are now unlikely before 2027.
• Capital strain at the thin end. Blue Motor’s loss nearly equals its equity; Startline lost a fifth of its equity in a year. Consolidation (or failures) among subprime motor lenders is a live watch-item.
• Another wave is coming. Ten of the lenders above have December 2024 year-ends, filed before the Supreme Court ruling and the final rules. Their next accounts, filed through late 2026, will carry the top-ups. The filed losses to date (~£1.3bn in the latest year across this set) are a fraction of the FCA’s £9.1bn for a reason: provisions phase in over multiple filing years.

If you bought a car on finance

The FCA estimates 12.1 million agreements written between April 2007 and November 2024 are eligible. The scheme is opt-in and free, with no claims-management firm needed, and the average payout is £829, with a small minority of high-commission cases receiving substantially more.

One caveat on timing: the lenders’ legal challenges have put the timetable on hold. Under the scheme as made, lenders had to contact eligible customers during 2026, with a final opt-in date of 31 August 2027. The FCA has since said it will not hold lenders to those contact deadlines while the case is live, and that payouts are unlikely to begin before 2027. Nothing about eligibility changes; the dates will.

Methodology and fact-check ledger

All filed figures (profit before tax, equity, dividends, admin expenses, headcount, total assets) come from the statutory accounts each lender files at Companies House, and every figure quoted above was verified against the filed accounts PDF (statement page, note number and all) on 12 June 2026. Where a company files consolidated accounts the table says so; provisions held at group level (Lloyds, Santander UK, FirstRand, Barclays) are labelled as group figures. Regulatory and press-reported claims were checked against the sources below on 12 June 2026.

This is analysis of public filings, not financial advice. Figures are stated as filed at the entity named; group provisions are labelled as group figures.