Mercedes-Benz is bracing for a £424 million loss relating to motor finance redress payments, according to a report published by The Times on New Year’s Day.

The newspaper, citing accounts recently published by Milton Keynes-based Mercedes-Benz Financial Services UK, said the latest £395 million provision had seen the company post a £364.6 million loss in 2024. The company previously set aside £28.8 million to pay compensation to mis-sold consumers.

What are the FCA’s redress proposals?

In its redress scheme consultation, published on 7 October 2025, the Financial Conduct Authority (FCA) estimated that an average of £700 compensation was due on 14.2 million motor finance agreements entered into between 6 April 2007 and 1 November 2024. The regulator, which says it will publish its final redress rules by the end of March 2026 after its consultation closed on 12 December 2025, estimates that lenders will repay a collective figure of around £8.2 billion in redress. We anticipate that car finance redress payments will commence by mid-2026.

What has been the reaction to the FCA’s redress proposals?

Reactions to the regulator’s plans have been mixed.

Lenders have broadly attacked the proposals, calling them ‘disproportionate’ and issuing several warnings about broader economic consequences and raising the prospect of bringing a judicial review to challenge the scheme. Such attacks from lenders are familiar and fit a general pattern of defences they have deployed against the regulator and its redress proposals.

In contrast, advocacy group Consumer Voice has called on the FCA to ensure that the redress scheme puts consumers first, whilst the All Party Parliamentary Group on Fair Banking, in a report published on 3 November 2025, went as far as accusing the regulator of ‘nakedly taking the side of lenders’ and listening to their ‘doom mongering.’

Which other lenders have set aside sums to pay redress?

Several banks, as well as the finance arms of car manufacturers, have made significant provisions for paying redress to consumers.

Lloyds Banking Group, the UK's largest motor finance lender via its Black Horse brand, has set aside the most considerable sum, earmarking nearly £2 billion across three provisions.

Mercedes’ provision is the biggest disclosed by any manufacturer to date, followed by BMW Financial Services, which has set aside nearly £207 million to cover its redress costs.

How can I claim car finance compensation?

The FCA’s redress scheme is designed to make it easy for you to claim compensation yourself and at no cost. However, there are several compelling reasons why you may wish to instruct a solicitor to manage your claim on your behalf.

You can register your claim with Harcus Parker here.